I suggest that if you really want to learn all the ins and outs of foreclosures, that you buy one of the many books out there. It's way too involved to answer under this forum, although the previous correspondents have done an excellent job in giving you the basics.

Work with a buyer's agent who can help you navigate today's market. It's not just about foreclosed homes, but short sales as well. And as Jim said, these 'bait and switch' advertisements online are confusing to say the least. But if you really don't want to talk to a buyer's agent, then get a book or two. That will get you started on the foreclosure world, but won't give you the strategies to employ in order to buy one in this market, like working with a buyer's agent.

Good luck Pelin!

Hi Pelin. You have already received info about what notice of default and bank owned means and why the "prices" are so low. As far as the process of buying a foreclosed property is concerned. There are essentially 3 ways. The foreclosure process ends with what's called a trustee sale which is conducted at the court house steps. You have to pay all cash and you don't have an opportunity to inspect the property and you don't get title insurance. Buying at the trustee sale is the most risky of the three, but can also be the most lucrative. I would not recommend it for a novice. If you don't know what you are doing and how to research title, you could end up with a big mess. If you need assistance, you'll have to hire a professional such as a real estate broker or attorney and pay them yourself because banks don't pay for any of that at a trustee sale.

If nobody bids at the trustee sale, the bank takes the property back and lists it with a local real estate brokerage. You will then buy it like any other property that's advertised through the MLS and you can get financing and you are given an inspection period (usually no more than 7-10 days). The bank will pay for the commissions which covers both the buyer's and the listing brokerage commissions.

The third option is to buy properties at auction. Properties that have gone to the auctioneer are typically properties that did not sell through the MLS within a reasonable time. Again, you can get financing and you will have the opportunity to inspect the property prior to bidding as the auction homes are held open prior to the auction. While it's not impossible to get a good deal at an auction, most of the properties sold through auction are not steals as you'll have to pay an extra 5% buyer premium. You can be represented by a real estate agent at the auction as the auctions pay commission. The commission is less than what is typically offered when a property is sold through the MLS, but it's better than nothing.

I hope this helps you in getting a feel for what's involved and how to go about it.

Best regards,
Ute Ferdig
Broker-Attorney
DRE # 01326917
Ferdig Real Estate Solutions
916-751-1267

Pelin, the "listings" that you have been looking at are the "bait and switch teasers" from Realty Trac. Realty Trac pays Trulia for the right to post notices of default and auction notices. However the listings posted here by Realty Trac are often not actual listings. When the "price" has nothing to do with the value, you can assume that it is not for sale at the price shown.

Pelin

If you saw this info on the tax record:

Notice of Default means the borrower is past 60 days late on their loan and the lender have filed, with the County Clerk's office, an official notice which begins foreclosure proceedings.

Foreclosure means the borrower has received a Trustee Notice to sell the property (This notice will contain an actual date that the property will be sold on). This means that despite the lender's efforts to warn the borrower that they have started foreclosure proceedings, the loan was not brought current and the lender is now moving forward with a sale of the property either on the steps of the county court house or at auction.

Bank owned means that the property has been purchased by the lender and goes into their REO (Real Estate Owned) property. The bank will hire the serviecs of a real estate agent to sell the property on their behalf.

Regarding why prices are so low, I would need to know what you are referrencing to give you a more precise answer.

The process in buying a foreclosed home is about the same as buying a traditional home for sale with the exception of some additional paperwork. Strategy, patience and education will assist in getting your offer accepted.

Hope that helps. Keisha :)

These terms all relate to the process of the lender(bank) repossessing a home. There are 4 basic steps,
1. Homeowner defaults on the loan - misses payment
2. The bank files "notice of default" - signifies publicly that the homeowner is behind
3. The lender takes the home to "auction" - to recover the lender's losses
4. If no buyers at the auction the home reverts to the lender and becomes a "bank owned property"

When this happens the home is usually sold for less than market value, which in turn lowers the values of the homes around it. One foreclosure in an otherwise good neighborhood can bring all the homes values down.

The process of making an offer on a bank owned home is very similar to offering on a private home. There is a little more paperwork involved. The problem most people have with trying to buy bank owned property is that it can take several weeks to get an answer on their offer. This can be a frustrating process if you are not aware of how it works before you get involved. With good knowledge and a good agent the process can be fun and rewarding.

Call me for more information, James 916-521-1214 or you can visit my website at http://www.SearchSacramentoProperty.com

Hi Pelin,

When you see Notice of Default and $2700 that means the homeowner has defaulted on their mortgage payment and owe $2700 of mortgage payments in addition to what is owed for the balance of their mortgage(s). The Notice of Default is the first step in the foreclosure process. If the homeowner is unable to get a loan modification, do a short sale or bring the loan current, then the next process will be Notice of Auction. If no one buys the house at auction then it will be bank owned also known as REO.

It means the home is not for sale. What you are looking at is the amount of back payments the seller owes to the bank, and that the bank has recorded a Notice of Default. About half of the NODs are brought current and never go to foreclosure.

If you want to buy a foreclosure, you'd have an easier time if you worked with an agent. Agents can send you listings that are actually available for sale.