What you need to know about buying a foreclosure
A Foreclosure property is one in which the previous homeowner or borrower has abandoned the home and turned it back over to the bank or the lender in charge of controlling the title indeed. A foreclosure typically happens when homeowners do not care to save their credit and have not communicated effectively enough with their borrower in order to obtain a short sale selling or a loan modification. At this point, the property has to revert back to the lender which holds the title and deed to the property. It is up to the bank now to sell the property. These properties may be sold at an auction or under a real estate agent if time allows.
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One thing you should know with a foreclosure is that the previous homeowner is nowhere involved. You will be dealing directly with the lender and doing that takes time. There are many parties involved with the procedure of selling and transferring ownership to a new borrower when you're dealing with a lender. The lender will need to approve your offer and may provide little if any repairs or requests given at inspection. With that being said, we still strongly recommend that you have a home inspection.
A home inspection, as with any real estate purchase, tells you just about everything about a property. Consider this a huge investment; you wouldn't purchase a stock without knowing as much as you can about it before the purchase. Transfer this thinking into real estate; understand and know as much as you can about this property before signing on the dotted line. An inspector will go through the entire property from foundation to attic and roof identifying and mapping out any areas of concern, repair or replacement. This is definitely one time where you need to accompany the inspector. Ask questions, find out information, and get to know your property. This is also a great time to learn how much things will cost or when they will need to be repaired or replaced. Consider all of these fees and repairs when making the final decision on whether this property will work for you or not. Often times you can get a great deal in a foreclosure property but you need to consider the costs involved in repairing or replacing certain items. Often times, previous homeowners are very distraught intent to leave the property in a less than desirable state.
Read more: Tips to Investing in Foreclosures
Selling a Foreclosure
As a homeowner you have no control once your property goes into foreclosure. You probably have already been evicted and have had numerous phone calls from your lender on settling up. If you've chosen to go the foreclosure route know that you will not be able to purchase a property within the next 2 to 7 years depending on your credit and buying habits. Unless you work closely with your lender or obtain a real estate attorney to handle your mortgage or loan modification or refinance, you will be evicted from the home and have no control over when the home is sold or for how much.
This is why a foreclosure needs to be the absolute last line of defense. If you absolutely cannot work with your lender or an attorney has not done everything possible to help you keep your home or reduce your mortgage payments, a foreclosure may be inevitable, however, there is usually always something that can be done.
A short sale is probably the best option. This is where the homeowner or borrower has control over the purchase and sale as well as any offers that come in. You have agreed with your lender to sell the property for less than what you owe.
Regardless of what side of the transaction you're on, if you're considering buying a foreclosure or you're currently facing foreclosure please give us a call. We have dealt with hundreds of transactions on both sides of the story and can help identify exactly what needs to be done in your situation and how to move forward in either buying or selling your home.