Foreclosure in Willow Glen>Question Details

Klea, Home Buyer in San Jose, CA

Are all homes in forclosure sold only through public auctions?

Asked by Klea, San Jose, CA Tue Aug 21, 2007

If so, what are the chances of a first time home buyer being able to outbid real estate agents who goes to these for investment properties?

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You have to distinguish between homes that the banks already own and properties that are still owned by the borrower, but a notice of default has already been entered. The foreclosure procedures vary from state to state and I can only speak for California. The foreclosure process begins with recording a notice of default and then if the borrower does not cure the default within the prescribed time, the bank will publish a notice of trustee sale (the auction). If the borrower can't come up with the money to pay what's owed, the property is put up for sale through auction on the day specified in the publication notice. If nobody meets the minimum bid at the trustee sale (usually outside the county court house), the property goes back to the bank. Once the bank owns the property, the bank will typically list the property with a local realtor to sell the property through the MLS. Only if the property does not sell through the MLS, will the bank turn it over to an auctioneer. It's my understanding that banks do not sell directly to buyers.

Many borrowers who are in default or who owe more than the house is worth, will try to sell the property before the auction day through what's called a "short sale." Essentially, when someone is trying to shortsell, they are asking the bank to take less than what's owed. Buyers who wish to buy a shortsale property have to expect to be very patient as banks typically do not respond very quickly to shortsale requests. They respond a lot faster to offers once they own the property. Bank owned properties are known as REOs (which stands for Real Estate Owned).
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2 votes Thank Flag Link Tue Aug 21, 2007
Ute Ferdig -…, Real Estate Pro in Newcastle, CA
Great question! You need to do a little research in your area to see houw forclosures are done. Look on the sheriff sale list etc. That does not mean you have to wait until the sheriff to try to purchase the property. The addresses are listed. You could make contact with a homeowner and try to reach an agreement to buy before it goes to sheriff sale. I would recommend getting an agent to help you with this as it would be nice to have someone who knows the business a little on your side. At lease the first time or two. Good luck
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1 vote Thank Flag Link Wed Aug 22, 2007
Ute, Excellent and thorough answer!
1 vote Thank Flag Link Tue Aug 21, 2007
If you are first time buyer you are not experienced to go to the court house ...I don't suggest it is a good idea. First, the properties scheduled at auctions get rescheduled. Second it is CASH only. Will you want to buy a home without even able to look at it?

The offering price are not low especially there is no warranty. What you have never seen or inspected is what you get....

The same applies to an auctioneer scheduled sale where he gets you all excited and you find out
you bid over the valuation price.
0 votes Thank Flag Link Thu Sep 17, 2009
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