Foreclosure in West Hartford>Question Details

Rachel, Home Buyer in West Hartford, CT

How long until a pre forclosure house in CT goes to auction or becomes REO? Which phase the best time to buy?

Asked by Rachel, West Hartford, CT Mon May 11, 2009

When is the best time to buy? Making an offer during pre-forclosure or waiting until auction or when the property is REO? Is there a certain percentage for a down payment that you need for a pre-forclosure or auction??

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Banks are realizing that they lose far less money by facilitating a short sale than by foreclosing on a property. As a result, short sales are becoming more prevalent and processing times are decreasing. For a short sale to be productive, a buyer must be patient--often waiting 8-12 weeks for the initial offer to be approved by the creditors. If you can afford to wait and to buy a property in "as is" condition, you can save thousands by buying a short sale.

Most foreclosures are listed in the MLS, so there are fewer auctions. The amount down depends on the mortgage you will choose---some foreclosures are in strong enough condition to allow 3.5% down and FHA financing (below 700 credit score can still work), but many foreclosures need more work---which means you need more $$$ down and more $$$ in reserves.
0 votes Thank Flag Link Sat Mar 31, 2012
Banks do not like to foreclose in this climate as well as own property. Do you have an agent? Going rate for FHA loans is 3% down, but most conventional loans are around 20% down. Please connect with an agent. They will be able to help you with this. Here are 2 contacts who might be able to answer your question. or You can also contact me and I will suggest someone to help you in your area.

Candace Lipira
0 votes Thank Flag Link Wed May 13, 2009
My advice..try it both ways. Put a bid and see what happens now ( If the pre foreclosure short sale is actively on the market) and if you do not make it, attemp to purchase it once its corporate owned. Last year I had 2 buyers who waited a long time for short sales, then the properties went to auction, came back on as REO's and purchased them. I would do both ways just incase someone might succeed the first time going the short sale route.
0 votes Thank Flag Link Mon May 11, 2009
It varies quite a bit. The process has surely slowed in the last year or two. I frequently see people in homes they haven't made a payment in about a year. If the homeowner makes no effort to work the situation out, the time between a lis pendens being filed and the foreclosure happening is about 3-6 months. However foreclosure can be postponed MANY times for the possibility of a loan modification or short sale workout. The bank would rather have a workout than a foreclosure and will postpone this for the possibility of a lesser loss.
As far as buying a foreclosure, it is my OPINION that short sales are better buys than REO's but I'm sure some will disagree. I'd love to see a study done on this actually.
I would not recommend buying at auction unless you have a lot of experience with this.It is very risky.
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0 votes Thank Flag Link Mon May 11, 2009
Hi Rachel,

"Best time to buy" varies greatly depending on one's goals.
Frequent pre-closure situations are listed properties with a Realtor, as the homeowners may attempt to sell before reaching foreclosure and/or work a Short Sale situation out with their lender. Buying then may be a great situation if the property in question meets all your Wants and Needs.

Once in REO, the lender doesn't want to keep the property, of course, so making offers then can work to the ultimate financial advantage. But waiting until then risks losing the property to another buyer, so if it is 'the ideal new home" for you, you may not want to wait until the 11th hour and risk not winning your offer.

Auction down payment percentages are usually pre-set and in the notice of auction. The value set is usually 10% of what the market value is deemed to be.

Down payments offered in pre-foreclosure or for an REO property listed in the MLS are negotiable items and your Realtor representing you can counsel you on that we you contemplate composing an offer. If your down-payment question was related to down payment minumums to be eligible for mortgage financing programs, then that can easily be determined in conversation with a mortgage consultant based on your individual financial situation.

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Good luck,
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0 votes Thank Flag Link Mon May 11, 2009
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