Four Things You Should Know About Foreclosures
Buyers often ask us about foreclosures or even pre-foreclosures they found on other websites. Many think that buying a foreclosure will mean a bargain, so it's easy to understand why it's a popular question. Here's what you should know.
- WHAT IS PRE-FORECLOSURE? Pre-foreclosure status is simply someone who is behind on their payments and the lender has issued a Notice of Election and Demand (NED) saying that they will foreclose on the property. The homeowner then has just a few weeks to either come current and make things right with the bank, or pay off their entire mortgage (usually by selling). In a market that has seen great appreciation like ours, selling is typically a solution that works - paying off the mortgage and often netting the owners a sum of money as well.
- WHAT HAPPENS AT FORECLOSURE? When the lender officially forecloses, they take possession of the home. Then, there are a couple ways that they move the home out of their possession, either at an auction or via a real estate agent sale.
- CAN YOU BUY AT AN AUCTION? If a home is being sold at auction, it can be difficult for a lot of buyers to jump in on the bidding. Typically you have to use cash, not financing, and you won't get a chance to inspect the home. The previous owners who were being forced out of their home may not have taken care of the property, and some even do damage before they vacate the property, so you can't be sure what you will get.
- WHAT HAPPENS IF I BUY BANK OWNED (NOT AUCTION)? Homes that are not sold at auction, may be sold by an agent working for the bank. This means that prices are negotiable, just like all other homes on the MLS. You'll also get to do inspections and use financing. However, this also means that prices tend to be the market value in our current climate.
When you are ready to buy your next home, we can help you look at all your options, and we can connect you with some great lenders to get you the right loan options too!