Pre Foreclosure are loans that the mortgage is deliquent and the owner is trying to sell the property before the foreclosure. This can be short sales (where the owner is underwater and owe more than the property will sell for) or the owner may have enough equity in the property. These properties depending on the condition of the property you should be able to get a loan.
Foreclosure auction properites you need to have at least 10% down in certified funds and typically need to come up with the balance within 10 days. These are usually bought with a line of credit rather than a normal loan because of the timing and the requirements in your state. There is a lot more risk in these transactions and you need to understand what you are doing, in buying at auction. These are as is where is transactions.
REO - Foreclosed properties- These are where the banks are selling the property after the loan has been foreclosed. The ability to finance these properties depends on the condition of the property. This issue will the bank will want to sell properties in as is condition.
First Weber Group
Certified Distressed Property Expert
letter from your lender sent over with the offer. Hope that helps! If you have any other questions feel free to call me 320-290-6681 or email me at Debbie.Bertelson@century21.com.
If you are purchasing at trustee sale, in Maricopa county, Arizona, you need $10K cashiers check or cash to bid at the sale. If you are the successfull winning bidder, you have until 5 pm the next business day to come up with the balance. Most buyers at auction will use hard money to purchase and then refinance out at a later date. This can be risky especially if you havent' had an opportunity to inspect the home entirely. The sale is completely AS-IS.
If buying after the trustee sale, once the property becomes an REO, bank owned home, you can have more time to inspect the property as well as obtain convetional financing.
It does depend on what juncture in the foreclosure process the home is in. I have found that bank owned properties (after the foreclosure process has been completed and now the bank owns it) are pretty simple to deal with. It's just like a regular transaction, just a few more forms to fill out. Those can be financed as well as short sales. If you are buying on the courthouse steps at auction, at least here in Arizona, you have to have 10% cash on hand, then you must come up with the remainder within 10 days. Most people will use a hard money lender to fund the purchase temporarily then refinance with a conventional loan.
If the homeowner has defaulted on their loan and has negotiated with the bank the sale of the home, it's typically a short sale. A short sale can be financed.
If the home is being auctioned by the county. Then it is generally an all cash deal and you are responsible for evicting the previous homeowner.
If the bank has taken ownership of the home and evicted the owners, then its called an REO and you do not need to pay all cash.
All of these types of transactions are fraught with tricky contracts. You should consider hiring an attorney to keep you informed of your rights.