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Harsha, Home Buyer in Edison, NJ

How to buy pre-foreclosure homes?

Asked by Harsha, Edison, NJ Mon Jul 28, 2008

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Thank you for your question about purchasing a home in Pre-Foreclosure. Please be advised that purchasing a home during the Pre-Foreclosure period of the Foreclosure process is a short sales. You can do a short sale with a good local agent.

A short sale is a sale where the price falls short of the loan. The Lender must agree to the sale. It is done to avoid foreclosure which can cost more. A note is left on the borrowers credit that the lender settled for less.

The Foreclosure process starts when a homeowner cannot pay the mortgage and ends when the home is resold. The three stages of Foreclosure are: Pre-Foreclosure, Auction, and REO/Bank Owned. Pre-Foreclosure is the time period a homeowner has to repay the delinquent amount of the mortgage. If a homeowner does not pay the mortgage the home is auctioned. If the bids do not meet the reserve the lien holder (bank) reclaims the property and it becomes a Bank Owned REO.
2 votes Thank Flag Link Fri Sep 3, 2010
One of the main pieces of advice on getting a good deal when buying a house is to look into foreclosure and pre-foreclosure listings. Nowadays, foreclosure listings are in abundance and are a great way to get a good deal on a home. My website, PREO Marketplace, specializes in pre-foreclosure listings. It is a unique online marketplace where users can search for and bid on pre-foreclosure homes. I thought this could be a good resource for readers of this blog. Check out my website at (http://www.preo.us.com) Good luck in your house hunting search!
Web Reference: http://www.preo.us.com
2 votes Thank Flag Link Fri Sep 3, 2010
Need more info...

Are you buying a home that is listed with an agent or one where you know the person is having cash troubles and is in danger of foreclosure?

It is important to know because if you are dealing directly with a home owner, they may not be aware of the procedures involved to submit an offer to the bank or more important, to get it accepted.

--
Victor Kaminski
Broker of Record
JERSEY BROKERS
2056A Lincoln Hwy. (Rt.27)
Edison, NJ 08817-3330
Office: 732-650-9911 Ext.302
Cellular: 908-884-5757
0 votes Thank Flag Link Fri Sep 3, 2010
Your best bet will be to contact a Realtor that either specializes in "foreclosures" or has had a few experiences with them. My office actually manages hundreds of foreclosures throughout NJ from all stages of the process: short sales/pre-foreclosure -->foreclosure --> resale of renovated foreclosures - in addition to handling regular residential resale. As most of the answers state, when dealing with a short sale/pre-foreclosure property, the bank's are seeking typically as much as possible. They're only willing to negotiate so much because they're taking a loss no matter what. So in terms of getting a "deal", you probably won't find as much of a discount as you would once it's foreclosed upon. If you're interested in looking at some properties in the Edison or in any particular area, feel free to contact me!

Christine Markow
ERA Statewide Realty
Office: (908) 874-7797, ext 519
christine.markow@era.com
http://learningaboutrealestate.blogspot.com
http://www.newjerseyhousehunt.com
0 votes Thank Flag Link Sat Aug 9, 2008
It's pretty much a straight forward process just like purchasing any other home however not just the buyer must accept your offer, their bank or banks need to as well which is why you will see in many of the listings subject to bank or 3rd party approval.

The banks need to evaluate the loan to see if the loss they are taking is an acceptable one according to the limits or formulas they use. Banks are slow and sometimes it can take months to get an answer, countrywide has been the worst lately with getting answers since they merged with bank of america and have often not been very reasonable with their acceptable amounts. (Thats another story!)

If your offer is accepted by the bank, the sale is pretty much like any other and should go smoothly past that point but don't expect to ask for any repairs to be done if something comes up during inspection unless it is something which would need to be repaired by the bank if they foreclosed the property and needed to sell it on their own. Pretty much as-is at this point, take it or leave it but you do have the option of backing out if it is something significant.

I'd be glad to help you or have one of my agents that has been specially trained in short sales help you if interested. Just call me and say the word. We'd be glad to help.

--
Victor Kaminski
Broker of Record
Marivic GMAC Real Estate
2056A Lincoln Hwy. (Rt.27)
Edison, NJ 08817-3330
Office: 732-650-9911 Ext.302
Cellular: 908-884-5757
0 votes Thank Flag Link Mon Jul 28, 2008
Harsha,
I am currently working with a buyer who we recently found out was buying a home preforeclosure. We should have closed in March when he had interest rate locked below 5%. Needless to say that ship has sailed and we are still waiting to close. As other agents have said dont expect it to be quick. Dont expect it to be a great deal either. Nobody want to leave money "on the table". If a owner is facing foreclosure and the house is worth more than is owed the seller would sell it before giving it back to the bank. In addition I have seen homes that went back to the lender and the seller ripped out the copper plumbing and fixtures before vacating. If you are looking for a "deal", be patient and work with an agent who can spot same. Insist that what ever property you buy will be able to cover it's costs in the form of rental income that is realistic. These are rare but in my opinion are the only "deals"
Kenneth "Ken" Verbeyst CRS GRI ABR SRES
Broker-Associate
Licensed Pa&NJ
0 votes Thank Flag Link Mon Jul 28, 2008
Harsha,
It is relativly easy to find a home in pre foreclosure or "short sale" call you Realtor and they will find it for you.
However don't expect the process to be easy and fast,it can take from a few weeks to 6 month to get it all done.
Homes that have allready been forecosed are easier and faster to sell.Contact a Realtor if you don't have one i can refer you one in your City.
0 votes Thank Flag Link Mon Jul 28, 2008
Almost always the mortgage lender requires that a owner list their property for sale with a Realtor before they will consider a short sale arrangement. Lenders are not in the business of selling houses. Realtors have a place on the listing to identify the short sale properties because they must note that the offer is "subject to 3rd party approval " meaning the mortgage lender must also approve the sale price. Call your favorite Realtor and ask for information about the short sale properties in your price range.

Be aware that short sales are not a quick and easy purchase. There are so many complexities. If you are the first or among the first to make an offer on short sale properties, expect to wait at least 60 days and maybe more than 90 days to hear back. The lender is collecting offers to select the best among them. There is a greater likelihood that there be outstanding liens, inspection problems, and so forth also. Short sale homes are sold "as is" but at least you are allowed to conduct inspections to determine whether or not to proceed with the purchase if yours is the selected offer. Usually you will have to pay to turn on the utilities for inspections yourself. I could go on and on, but I hope you will work with a good Realtor who will help you through all the ups and downs of these short sale property sales. There are some terrific bargains available and also some properties with problems that you should approach with "buyer beware" attitudes. Good luck.
0 votes Thank Flag Link Mon Jul 28, 2008
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