Foreclosure in 08826>Question Details

Kathy Gallig…, Other/Just Looking in 08807

We discovered that a house we are interested in is listed on trulia with a notice of default. I assume that

Asked by Kathy Galligan, 08807 Wed Apr 29, 2009

this means that the owners are behind in payments and may be in jeopardy of forclousure. Does this notice of default give us more bargaining power? Should the listing realtor know this information and disclose it to potential buyers?

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Just because there is a notice of default doe not mean you have more bargaining power. You could but it depends what is in default. All the notice of default tells you is that a loan is in default, it could be a first loan, a second mortgage or a heloc loan. The loan could be reinstated with a tax refund or a modification or repay plan can be agreed on between lender and owner. The listing agent may know depending if they were in default at the time the listing was taken. However, if the owner went in default after the listing was taken the listing agent may not know. Also there is no reason for the listing agent to disclose that the mortgagor is in default unless the sale of the property would need to be approved by the bank because it would be a short sale.

Keith Manson
First Weber Group
Certified Distressed Property Expert
Greenfield,Wi
1 vote Thank Flag Link Fri May 1, 2009
It may not give you an advantage, if the seller owes more than what they are asking for, or close to the asking price and they may have to pay the bank late fees and fines. This might become a short sale and then even if the seller agrees to the price you offered, the bank will need to approve the short sale, unless the seller comes up with the difference at closing, which most likely they won't because they probably don't have the money to do so.
Another option that might give you more bargaining power is looking for a bank owned home or REO. They want to sell, it usually will be a very quick closing but you will buy strictly as is and they will sell for the market value or lower, they are not looking to make a profit. You have to do your homework upfront and make sure this home is what you want, home inspections, etc. Sometimes you can get a great deal. Find a "buyer's agent" to represent you because the agent for the bank will not be able to, they will have the bank's best interest in mind, not yours.
1 vote Thank Flag Link Wed Apr 29, 2009
The listing realtor should disclose if the sale is going to become a "short sale" situation. There are many levels and types of "defaults". In NJ the first step in a foreclosure filing is called a les pindens and it is recorded with the county clerk. The foreclosure process can take several months from the time the les pindens is filed and there are several ways to stale and/or stop the proceedings. As a buyer you should be careful when bidding on or buying a property that is distressed and you would certainly want to purchase title search & title insurance (this is required if you are going to be financing the property with a mortgage). It may be best to consult a buyers agent (realtor) to assist you with placing an offer and then using a real estate attorney to help you close the deal. Buyers agents commissions are usually paid by the sellers and real estate attorneys generally charge a flat fee for buyers.
Web Reference: http://www.realtorkens.com
0 votes Thank Flag Link Thu Jul 16, 2009
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