Foreclosure Homes For Sale Opportunities
You will not even believe it till you see it for yourself!
Truth be told, many of these foreclosed homes Sell at 30% to 50% BELOW MARKET VALUE!
HELLO! Don’t you think you should take a closer look?
Your chance to buy a Foreclosed Homes for Sale at a discounted price
First a quick overview of what foreclosure homes for sale really means. From there, a easy to understand explanation of the key points you will want to know about owning one of those foreclosed houses for sale.
BUT, that means being Smart about foreclosed houses for sale
As in working with a savvy Realtor that can help you plan for the foreclose homes for sale opportunities in your local Real Estate market.
Start with the most widely accepted definition for foreclosure homes for sale. A foreclosure is nothing more than a lender asking the in distress homeowner to pay up. This is a legal process which can and often does involve numerous steps along the way.
There will be a time when the legal process winds it way to it’s eventual conclusion. That means an outright sale of the property is ordered by the presiding judge
This is where the term “sheriff’s sale” originated. In essence, that means the distressed homeowner above has exhausted all available options and now the property will be sold at a public auction.
Note that in most cases, the mortgage lender will end up taking possession of the property. Now that property is more properly classified as “bank owned” or REO property.
All of the above being said, do keep the main point in mind. Foreclosure homes for sale could be the home buying opportunity you have been looking for.
Possible foreclosed houses for sale traps to avoid
Be aware of what the Title Companies refer to as “clouds on the title”. This could be other mortgages such as home equity loans, property taxes owed to the local city or county, or even construction liens from contractors and such.
Note that these owner obligations may not be part of the foreclosure process. Keep in mind, that a foreclosure is about the PRIMARY or 1st mortgage on the home or condo. Those other items mentioned above are secondary or in “ legalese” referred to as Subordinate.
In other words, the primary mortgage is inline to get most of the pie. As far as all the others, they have to get in line behind the first mortgage.
What that means in practice is that when and if you decide to pursue the option to purchase one of the numerous foreclosure homes for sale you have to be focused on a key idea. That idea is to do whatever it takes to only ever purchase what is referred to as unencumbered property or at the least a property at which the encumbrances are part of your calculation.
Example 1: Bank Owned or REO
Consider one example of how this might show up in practice. Suppose your trusty Realtor found you a cozy 3 bedroom foreclosure home in an up and coming neighborhood. The bank that now owns the home is asking, say $149,900. You huddle with your Realtor friend and run some figures.
Your Realtor points out to you that comparable homes in that neighborhood are selling at around $215,000. You figure you will need about $12,000 to $18,000 in repairs and upgrades to turn this home around into a move in ready property.
At the same time, because the bank itself now owns the property and will in fact do their own title work as well as lien searches, this might be the deal you have been looking for. Why so? Take a look at the next example and the answer will be immediately obvious.
Example 2: Not Yet Bank Owned
In this example, there is an in-distress homeowner that has not yet been foreclosed upon. This is a property in which the owner has recently received the dreaded lis pendens but the actual sale date has not yet come about.
Note that the first step in this foreclosure process is a hearing in front of the presiding judge. At this hearing, the mortgage lender will request a timely foreclosure sale date.
For the sake of this example, consider this to be a similar house in the same neighborhood discussed above. The only difference is that at this point, this home is what is referred to as a Pre-Foreclosure Listing.
The point to be very aware of is that Pre-Foreclosure home for sale might have secondary liens and encumbrances that could eat any expected profit you had hoped to make.
Does that mean that bank owned foreclosed houses for sale are the better choice? Sometimes yes, sometimes no. In other words, it depends. For example, one factor that will always come into play is how much due diligence you conduct ahead of time.
Your Foreclosed Houses For Sale Homework
What does due diligence on foreclosure homes for sale look like in practice? Think of this as the first and arguably the most important step in your foreclosure home buying homework.
At this stage, you will want to take a good look at the condition of the home itself. This is where you sharpen your pencil, bring out your calculator and meticulously tally up the costs of repairs, upgrades and that sort of thing.
You are aiming to get a realistic figure on how much or how little profit there might be in this deal. Of course, answering that question will also depend on how you are looking to use this foreclosure homes for sale opportunity. As in:
- Do you intend to rehab it and flip it?
- Do you plan on rehabbing it and renting it out? Since there is such a shortage of rental properties in our area, that may well be a good choice.
- Do you plan on fixing it up and moving in it yourself?
Obviously, your intentions for the property will be the focus of your calculations above. Anyway, your takeaway here is to understand the importance of taking a bit of extra time to do your homework up front.
Then and only then, when you are clear that you have a potential winning candidate, you progress to the next step.
At his phase of the foreclosure homes for sale buying opportunity, you turn to your Realtor and ask for a reputable Title Company. The Title Company is the organization with the tools to uncover any liens or unexpected situations you need to know about.
Armed with this knowledge, you can now make an informed decision on that particular property. That being said, do understand that you will need to pay for that Title Company’s work ahead of time.
Naturally it makes sense that you will only have this work done if you have done the preliminary foreclosure home buying homework and have decided this one is good opportunity for you.
Recap: Where you are with foreclosed houses for sale?
- Now you are ready to go for it. You are armed with a clear understanding of how much or how little you will need to invest to purchase the property.
- You have a good working budget for repairs, upgrades and such. Finally you are comfortable with the findings of the Title Company you hired that you will face no unexpected surprises at Closing or shortly thereafter.
- Now you understand the difference in bank owned foreclosure homes for sale (REO) compared to Pre-Foreclosure listings. Neither opportunity could or should be considered superior to the other, just different. Either situation could offer you the rather sizable discounts you are looking for on the purchase price.
Ready to get started looking at foreclosure homes for sale?