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.
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You can buy foreclosures for as much as 30% or 40% below market, but most foreclosures sell for less than 5% below market. That small savings may be offset by other factors in the transaction.
Price-conscious home buyers are lured by the low prices advertised for properties in foreclosure. They hope to show up at the auction and win the lowest bid. Before you rush forward to buy a foreclosure, stop to think about some of the drawbacks and repercussions of a foreclosure sale.
For most consumers, purchasing through the foreclosure process can prove daunting. Good buys are available, but they require research, preparation, patience and persistence. And retail sales are priced using the very same comparable sales, so their price is often comparable.
The foreclosure process starts when a property owner falls behind on mortgage payments. Many owners of homes that go into foreclosure have been struggling financially for almost a year before they give up, which usually means that the house has not received needed repairs or general maintenance for a while.
This may run the entire spectrum of issues, from missing light bulbs to roof leaks. Trash in front yards, dead landscaping, broken appliances and windows, and dirty carpets, floors and walls are found in properties even in very affluent areas. Homeowners who are angry about losing their house have been known to remove fixtures, cabinets, appliances, even the tub or toilets. Walls may be broken, and pipes for the plumbing removed.
Houses in poor condition might fetch bargain prices, but repairs can boost the cost again. Any savings in price is eaten up by cash that must be put into the property to make it habitable. If this is a first home for you, and you are living on a tight budget, your purchase may leave you no money afterward for major repairs or upgrades. In that case, a â€œretailâ€ purchase (one where the owner is the seller, as opposed to a bank) is a much better solution for you.
The first rule of real estate, (â€œlocation, location, location,â€) applies here. If there is trash in every room of the house, but the property is in a good area with high resale values, hold your nose, walk through the entire house and consider making a low offer.
Be sure you know who is living in the property. If the property is occupied, the successful bidder is typically responsible for removing the occupants, who may not be the previous owners. They could be relatives or friends of the owners, renters or squatters. These tenants have rights. Be sure you are aware of all local ordinances that may apply, because you might have to evict them. If you are unfamiliar with eviction processes, you should hire a lawyer to handle it for you.
Because these homes are purchased â€œas isâ€ from the lender or HUD, there is no guarantee of condition, and properties are often sold â€œas-isâ€, with no warranties. Sometimes it is possible to inspect these homes prior to making an offer, but sometimes access is not granted.
If the property is in poor enough condition, it will not be eligible for many loan programs that would otherwise be attractive to a first time home buyer, including FHA. Some foreclosures are advertised as â€œcash onlyâ€ purchases for this very reason; no lender will make a loan on the property.
Buying foreclosures is not for the faint of heart. Itâ€™s best handled by savvy investors and is not recommended for first-time homebuyers. This information is not meant to scare you, it is meant to prepare you for the reality of the foreclosure market.
If you still feel a foreclosure is for you, I would urge you to do the following:
1. Speak with a mortgage broker who is knowledgeable about lending on foreclosures. Get pre-qualified with several different loans you could use, depending on the overall property condition.
2. Hire a great Realtor as your exclusive buyerâ€™s agent. Have them run a property profile on each property you are interested in, as well as a complete market analysis. Be sure that the â€œbargainâ€ you are buying is really a bargain.
3. Speak with a home inspector and a contractor, so you are sure you know the condition of the property and the true cost of repairs.
4. If you canâ€™t see the home, donâ€™t buy it. If itâ€™s not a bargain, pass it up.
5. And please, remember to look at those retail sales. In the long run, it may be a simpler, happier way to go for a first time homebuyer.
Would you like to speak more about this? Please feel free to call or email me. Regardless, congratulations on purchasing your fist home.
Foreclosures are the hot items these days. I help people buy foreclosures and am quite knowledgable about a few areas in LA where buying at a low price and selling at a profit is still viable. Buying a foreclosure is a rather easy transaction once your offer is accepeted.
Feel free to call me or email me and I'd love to help you look for and acquire a property
I've never heard of Vermont Harbor, Los Angeles--where is it? What part of LA?
I hope to hear from you if for no other reason , than to learn where Vermont Harbor is.
Keller Williams Realty
You need to clarify what you mean by "foreclosure" before anyone can truly answer that question.
Each of my colleagues appears to have assumed that you mean REO or Bank Owned Properties. These are often referred to as Foreclosures, and as stated, they are listed on the MLS just like any other property. The trick to picking these up is how you write the offer and how you plan to purchase the property (cash, conventional, FHA, HomePath, etc.).
Another type of property, often referred to as a Foreclosure, is a property that either has a Notice of Default or a Notice of Trustee Sale filed against it. Many of these homes are 'under water'. The loans are higher than the fair market value. For that reason, many of these are sold as short sales. Again, these are usually listed on the MLS and you purchase them just like any other property (only you have to have lots of patience since they take a while to go through).
Many people who are interested in buying foreclosures are thinking about buying them at the Trustee Sale or Auction on th courthouse steps. Here, you will find fewer realtors who have any extensive experience in helping buyers. First, the buyer has to pay cash for the purchase price bid. Second, the properties are rarely available for viewing before the sale and may be occupied once you aquire title. Lastly, you really need to know what you are doing. You could end up with someone else's headaches (I could tell you stories if you want to hear them). The Auction is not a good place for the unsophisticated investor or buyer.
Most agents don't get involved in Trustee Auction transactions for a number of reasons, including the legalities of the transaction, the risks involved and the fact that they do not get paid a commission by the seller. If you would like more information, please feel free to contact me. Dare to Dream.
Shel-lee Davis, CDPE, SFR, QSC
Your Real Estate Consultant for Life
RE/MAX Palos Verdes Realty
We have recently listed and sold foreclosures. We have a Foreclosures tab on our website. Visit: http://www.KimAndKristine.com to do a free search. Contact us at 310-737-8173 to find out about the Best foreclosure deals.
Yes there are many Realtors who will help you buy foreclosures. Foreclosures go on the MLS just like any other home for sale, though the process may be a little different. You should talk some who have a lot of experience helping buyers with foreclosures and work with the one you feel the most comfortable with. Be sure to ask things such as how many buyers they have represented, their success rate at getting offers accepted, how they will help represent your best interests.
As one of the top buyer agent in Los Angeles who does largely with foreclosure sales, I would be more than happy to discuss with you the process of buying a foreclosure. Feel free to give me a call or send me an email at any time!
Keller Williams Realty
#1 Buyers Agent KW Los Angeles
Yes, there are many agents that can help you with foreclosures. You definitely want to work with someone who has a lot of experience as an agent's experience is key when looking into buying foreclosures and receiving the best representation. I'm in escrow on 2 foreclosures currently and sell a large number all over Los Angeles (on the listing and selling side). Please let me know if I can assist you in any way.
Keller Williams Realty