Please explain what "entering default" means and does a potential buyer negotiate with the lender or owner?

Asked by Nick, Houston, TX Wed Nov 19, 2008

If, for instance , a home is in default, with $200,000 owed, does it mean that's the asking price?

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Carmen Rodri…, Agent, Chicago, IL
Mon Jan 13, 2014
A home in default does not mean the house is for sale. It simply means that the homeowner is now in default with their mortgage or in other words behind on their payments. Depending on the State if this home even gets to market for sale (as many don't since owners may negotiate loan with lender and keep their homes with a loan modification). The first stage would be a shortsale if the lender even allows it. Also, since the owner is in default you will likely NOT be able to negotiate this solely with the buyer as shortsales require the approval of multiple parties including the buyer and lender/investors.

Should you need assistance in buying a home in Houston or elsewhere I can help you.
For real estate worldwide, whether you need a home in Texas, New York, Florida, Chicago, Canada - anywhere in the world for that matter - there is no better place to begin and end your search than Century 21 Real Estate.

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Florina Mass…, Agent, San Clemente, CA
Sat Jan 4, 2014
As you already learned, "default" on a loan means that teh woner is behind the payments at least 90 days. If owner does not pay back ( reinstate) teh remainder, teh bank initiate a foreclosure process. The owner has th eoption to choose a Real Estate agent like myself specialized and experienced in short sale process. This agent will negotiate with the bank by herself or have an outside negotiator. I am specialized in short sales, I have one now in Laguna Hills ready to be approved by the bank. Contact me with your specifics and wil help you to get qualified to buy a great deal property. All cash of course has to be proved. Asking price is established by the agent as a FAIR MARKET VALUE means, sold below active comparables. Contact me for details Florina Massbaum Realty ONE Group
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Harrison K.…, Agent, Irvine, CA
Fri Dec 5, 2008
Nick ... You will apparently be buying a home at Texas. Please use a qualified Realtor agent in your area for this. If you want a Texas reference, let me know. Please be careful about getting advice from folks who are not involved with real estate in Texas. Your laws there for transactions and default process will be complicated and unique.

With our best wishes.
Harrison K. Long, Explore Group Properties, Coldwell Banker Previews.

For the best California home and property search check out
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Todd Foust, Agent, Anaheim, CA
Tue Nov 25, 2008
Entering Default means simply that the owner has fallen behind in payments.

No the amount owed does not necessarily mean this is the asking price. The asking price may be higher, the same, or even lower than the amount owed. If it is lower, we call this a short sale. In a short sale the price is usually set by the owner and agent, not the bank, but the bank will have to approve the priceand loss in order for you to comsumate a sale. This proces can take some time so be patient. I've included some links to our Orange County short sale tutorial as well as some of the latest updates with the success of these sales.

You will be dealing with the owner as far as getting your offer signed but then it will be submitted to the bank for approval. It has been my experience that most owners don't care what the house sells for since they won't see any profits but beware because your offers will need to be crafted well enough for the bank to approve them, not just the current owner in default. Hope this helps. Let us know if you have other questions.……
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Harrison K.…, Agent, Irvine, CA
Sun Nov 23, 2008
Nick ... If you are in Houston and wanting to buy a home at Texas, we recommend that you hire a qualified Realtor agent there.

Our California situation on REO properties and default is unique. If an owner is entering default, this usually means a notice of default has been filed and recorded by one of the lenders. That would start the foreclosure process in California, which would end later with the actual trustee sale and completion of foreclosure.

Harrison K. Long, Realtor agent and broker, Coldwell Banker Previews, Irvine, CA

For the best California home and property search site check out
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Brent Griffis, Agent, Birmingham, AL
Wed Nov 19, 2008
No, it means that the bank is getting ready to take it back. Forclouse on the property. if it is for sale "entering default" it might still be owned by the occupant so you would be dealing with them and not the bank. Although if you offer less than what is owed the owner or broker can ask the bank for a "short sale" and sell it to you for let than what is owed and the bank takes a loss, the owner is out of the deal and you get the home for the agreed upon price. you need to find a good buyers agent who understands short sales. let me know if you need a recommenation for one. i can have our Relo Director pair you up with one.
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