Foreclosures Frequently Asked Questions
I am a second time home buyer but on a limited and strict budget. I need to find a home that offers maximum space inside and out for my dollars. What advice do you have for me as I start looking for an opportunity in the foreclosures market in my county?
Be aware that distressed price foreclosures with potential are snapped up very fast indeed. So our advice is to get your financing prequalified before you identify possible foreclosure deals. Know exactly how much will be available, not only for the bid price on the possible property, but also for the one off costs that you may be faced with before you can live in the home. How long the property has been unoccupied, or under the threat of foreclosure, is important to know as this most likely will mean higher costs of essential repairs. Note that if you intend to bid on property subject to a published Notice of Sale, you must have cash or a cashier’s cheque ready.
When does the foreclosure process legally commence?
The process of foreclosure commences when the Notice of Default is a matter of public record. The lender will have given a period of notice to the property owner of his intent prior to filing. Most commonly mortgage payments will have fallen 2 to 3 months in arrears. Note that the NOD must be recorded in the county in which the property in question is to be found.
In Real Estate foreclosures what is a short sale?
The property is in the foreclosure process (a Notice of default has been published) but the property owner still owns the real estate in question. The lender or lenders agree to accept that the property will sell for less that the total of the loan(s). Note that the lender(s) can require the buyer to make up the shortfall.
I am considering looking at foreclosure property to ensure that this time out I get a bargain! If possible I would like to do this without paying Real Estate commissions. Can you help me be better informed about the buying process?
Take all the pain out of the first step, identifying suitable properties. Use the fast easy to drive tools now available on the Web to search the database of listings in the county or city of choice (best choose one you know well enough). Take advantage of free trial periods offered by the listings sites to test out the ease of use, range and freshness of property on offer. Remember that good deals go fast.
Once you have identified a small number of foreclosure homes, get the full sales values of other property in the neighbourhood – use the web listings again!
Then there is a bit of legwork to be done, this can be a challenging process when time may be against you. Here are some of the steps you need to take. Inspect the property thoroughly to assess or engage expertise to assess, the cost of essential repairs. Conduct a title search to verify ownership, research existence of all liens, identify any potential problems. Get the minimum bid price from the trustee for the impending sale.Check out with him if there is a redemption period for the previous owner(s).
Is there a difference between REO and bank foreclosures?
A bank foreclosure is also known as a Bank Repo and a REO, or Real Estate owned by the lender, in this case the bank. REO is the description of any real estate reverting back to the lender following an unsuccessful trustee sale or foreclosure auction.
Give me some examples of the extra costs I must consider when estimating the ROI of a possible foreclosure property purchase.
Property sold as a foreclosure sale is sold “as is” and that may mean the cost of an eviction as well as repairs and some renovation. If REO ( owned by bank), the bank may do some repairs after handling any eviction necessary. Were you able to inspect the property thoroughly inside and out? Did you note whether any of the usual range of appliances were in place and included in the deal? Remember to cost in the interest on borrowed funds while you wait for repairs to be completed, lost rents, all those costs associated with time delays.