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Check with your local county office to find out how sales in your area are handled, but common threads among most of them are:
Sometimes buyers are not allowed to inspect the house before making an offer. The problem with buying a house sight unseen is you can't calculate how much it will cost to improve the structure or bring it up to habitable standards. Nor do you know if the occupant will damage the interior. On top of that, you may need to evict the tenant or owner from the premises after you receive title, and eviction processes can be costly. Auction: If the loan is not reinstated by the end of the pre-foreclosure period, potential buyers can bid on the property at a public auction. Buyers often are required to pay in cash at the auction and may not have much time to research the title and condition of the property beforehand; however, a public auction often offers some of the best bargains and avoids the unpredictability of dealing directly with the borrower/owner. Bank-owned (REO): If the lender takes ownership of the property, either through an agreement with the owner during pre-foreclosure or at the public auction, the lender will usually want to re-sell the property to recover the unpaid loan amount. The lender will then typically clear the title and perform needed maintenance and repair; however, the potential bargain for these REO homes is typically less than a pre-foreclosure or auction property. Before you buy You'll need to make sure you're armed with the foreclosure data you'll need to find and buy foreclosed homes. You can start by searching a foreclosure listings database, which includes pre-foreclosure and auction properties across the country and a nationwide bank foreclosures list. Short Sales: What is a short sale? A short sale is a sales transaction in which the seller's mortgage lender agrees to accept a payoff of less than the balance due on the loan. A short sale may or may not involve a property in foreclosure. Why Are Short Sales So Troublesome? Short sales seem like a win-win for everyone involved, but as real estate professionals know, short sales can be hard to pull off. It can take months for the mortgage company to respond to an offer, and the lender or lenders often balk at the price. Why doesn’t the process go more smoothly when it seems like a much better deal for everyone than foreclosure?
More Banks Consider Short Sales After about a year of dealing slowly and reluctantly with short sale offers, many banks are reconsidering, looking for solutions that will allow them to recoup debt in foreclosure situations. Observers say that if the trend continues, it will reduce or eliminate the need for taxpayer bailouts. The National Short Sale Center, which helps short buyers negotiate with banks, says three-quarters of its short offers are approved now, up from maybe half six months ago. Lenders Stall Short Sales, Practitioners Say Real estate practitioners across the country believe mortgage lenders are worsening the housing downturn by taking months to make decisions on short sales and sticking to high internal target prices. As a result, home buyers are abandoning short sale properties, forcing them to be sold in foreclosure sales that typically result in lenders accepting lower prices than they could have achieved in a short sale. Some practitioners contend that lenders lack the appropriate systems and staff to handle short sale requests, while lenders insist the short sale process is complicated by the need for approvals from investors and mortgage insurers. Still, practitioners note that a more efficient short sale process would boost prices and reduce inventory. |
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