Home Buying in 92612>Question Details

Anne Collins, Home Buyer in 92612

If I see a foreclosure property listed at, say $70K or $100K what additional costs are liable to be involved?

Asked by Anne Collins, 92612 Fri Aug 7, 2009

This enquiry is from overseas so I just don't understand the system. It looks attractive but obviously there is more to it than meets the eye. Can someone give me a beginners' guide to how it works, please?

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I agree with Bob that what you are probably looking at is a site or information that is reflecting the current amount due on the loan that is in default and is not indicative of the value of the home. For example the number you are seeing might include past due payments, late charges, attorneys fees and/or any other amounts that are due to the lender at the time the Notice of Default and/or Notice of Trustee's Sale is filed.

We actively track pre-foreclosure and foreclosure properties in Irvine and the surrounding areas so if you have further questions on the process or we can be of assistance, please do not hesitate to contact us.
0 votes Thank Flag Link Wed Aug 12, 2009
A lot of people wander onto foreclosure data sites and mistake information they find there to be actual list prices of properties. Eventually that might be the case - in maybe as high as 1% of the time.

What they are confused by is that the foreclosure site posts an amount of a loan on a property that has had a notice of default filed on it - for that one loan. That figure is usually far different than the potential value of the property.

If a homeowner has some equity they usually will stop the 6 month process that follows by either stepping up to make the payments, or, they sell the property and take their profit/equity. If there isn't any equity, they usually start contacting the lender(s) to re-negotiate their payments, or to put a short sale in motion - effectively selling the house for less than is owed, frequently with the blessing of the lender.

The final step, if none of the above are successful is to suffer foreclosure. An auction takes place on the courthouse steps and if someone is a successful bidder - paying FULL CASH, right then and there, there can occasionally be a good deal - one that individuals like yourself, rarely see. Most such properties are bought by investors with cash - which precludes 99% of us. Frankly though, at the vast majority of these auctions, the lender simply ends up taking the property back - wiping out other lenders, who might have had loans on the place, in the process.

Your probable best bet is to buy a foreclosure from one of these lenders. ( REO = real estate owned.) They are seldom, however, a great deal, as the lenders aren't entirely stupid. They find out what the neighborhood values are and price their inventory slightly lower - 5 or 10% lower than nice, fixed up properties, just down the street - which actually might turn out to be just as good a buy.

The number of houses that have sold for less than $100k, in a nice area of Orange County, in the past year could be counted on one hand. Remember, if it sounds too good to be true, it usually is.
0 votes Thank Flag Link Fri Aug 7, 2009
Dear Anne,
Well it could be any number of things depending upon the property. Often a foreclosure will have defects and more. I have seen foreclosures without any sinks, bathtubs or cabinets of any kind! You have to be prepared for work on a foreclosure property!
0 votes Thank Flag Link Fri Aug 7, 2009
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