how do i buy a hom ein foreclosure, how does that process work.?

Asked by Liana, La Crescenta, CA Sat Sep 12, 2009

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Robert Spino…, Mortgage Broker Or Lender, Mill Valley, CA
Sat Sep 12, 2009

If you would like some help with the pre-approval on your financing, please feel free to get in touch with any questions. As stated below, the fact that you may purchase a home in foreclosure is largely irrelevant to the initial steps you would take.

Thank you,

Rob Spinosa
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Voices Member, , Benton County, OR
Sat Sep 12, 2009

For browsing actual foreclosures listed for sale ect.. you may find this useful

The Banks and the Gov. have created sites to provide the public with information on the Bid/Purchase process as some are different than others and to provide access to their properties for sale listings..(REO/Foreclosures)

Sites like.... .... ...

The links to these Bank and Gov. sites can be found here....

If it's Tax sales you're interested in then you may find this search engine useful...…

Good hunting, Dunes
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Andrew Jones, Agent, Venice Beach, CA
Sat Sep 12, 2009
Hi Liana,

No wonder consumers are confused about the forclosure process. Here's a simple guide to the basic types of forclosure related sales.

Short Pay or Sale: The homeowners have negotiated with the lenders to sell the property at less than is required to pay off the original loan. The lenders agree to accept the net proceeds as full payment for the loan, but there is an approval process which can add several extra months to escrow. Many transactions are not approved.

NOD (Notice of Default): The lenders record this document with the county to officially start the forclosure process. Homes in this category can still be listed and sold by the owners until the foreclosure is final.

Bank and Investor Owned (REOs): The owner has defalted and the lenders or their assigns now hold title. There is usually a corporate approval process, but since California has no right of redemption after the foreclosure is final, the property is essentially listed for sale by the legal owners.

What's really happening with a lot of these sales is that the lenders and corporate owners are willing to sell at up to 20% less than market value to clear their books and generate cash flow. The result of all of this 'forclosure' activity is that the market is experiencing an artificially low valuation and is likely to stay that way until the excess inventory of properties is sold off.

With the exception of unlisted NODs, all of these other categories of properties are simply for sale. They shouldn't be considered a better deal than a house offered by an undistressed owner who is willing to sell at the prevailing rate.

There are also an increasing number of homes being offered at 'leader' prices which are obviosly low by any standard. These are typically corporate sellers who have listed a property so low that it creates an informal auction. There's an initial frenzy and then the remaining serious bidders duke it out. It's an obvious ploy that genrates a lot of interest quickly and often ends up selling the property for more than it might have. Also, the public never sees the final result so it leaves a false impression, creating yet another drag on the market and frustrating a lot of buyers.

Here's a link to a good free tool called Market Snapshot that may be useful to you. It will give you this week's housing pricing and conditions including community reports for any neighborhood from L.A. & Orange County to San Bernardino.

Please feel free to contact me through my Trulia Profile or my website posted below if you have more questions. Best of luck.
0 votes
Keith Sorem, Agent, Glendale, CA
Sat Sep 12, 2009
For the most part a property sold by a lender is going to be sold close to market value. Right now in La Crescenta, as of August 31st, there were 74 homes for sale. During the month of August 40 homes closed escrow, giving us an Absorption Rate of 1.9 months. A balanced market is normally considered to a six month supply of homes. That would mean that if we were selling 40 homes per month, we would need an inventory of 240 homes...but there are only 74. So in the La Crescenta area, a well-priced home will sell with multiple offers over asking price...whether or not it is an REO.

So, the market conditions are a greater factor now in purchasing a home, rather than the type of sale.

A few hints on dealing with REO properites:
1. Poor condition - some REO properties have been stripped of valuables, such as sinks, toilets, etc. That is important because the underwriter for your loan may require that these items be replaced so that there is a working kitchen and bathroom before approving the loan for funding.
2. Over-priced properties - just because it is owned by a lender does not make it a good deal Lenders are already losing money on the property, so it is not uncommon to see REO properties overpriced because the lenders are trying to squeeze every dime out of these sales.
3. Uner-priced properties - some REO agents now that the best way to get the best price (and TERMS) is to list the property at a low price, get multiple offers, then cause a bidding war, causing the property to sell OVER market value.

Hope this is helpful.
0 votes
Stacey Wyatt, Agent, Roswell, GA
Sat Sep 12, 2009

Check out my Blog on "How to Find a Foreclosure Deal". Laws very from state-to-state, like the required advertising tIme before a house can be foreclosed on and the right of redemption period (time period a Home Owner can get there house back after the Foreclosure Auction), but the process is very similar regardless of the state.
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Liz Barkhord…, , Glendale, CA
Sat Sep 12, 2009
Hi Liana

There is also the foreclosure process before the property becomes bank owned.
Some people do buy the property then - either by talking directly to the home owner and creating a short sale or by bidding (cash) on the courthouse steps at the foreclosure auction.
Most buyers prefer to stay clear of all of that and wait for the property to be bank owned, then as John says it's a much more straightforward process.

Regards, Liz
0 votes
John Barry, Agent, Eagle Rock, VA
Sat Sep 12, 2009
Hi Liana,

The process for buying a home in foreclosure from the standpoint of the buyer is really not much different than buying a home from a regular seller, although there are certain seller disclosures in a property sold in foreclosure which the seller (lender) will not be required to provide, as they would have no knowledge of.

Basically, your first step would be to get pre-approved by a lender up front so you know exactly what your purchasing power is and what you qualify for. You should work with a good buyers agent who can research available foreclosed properties for you and provide you with the information on them, help you in viewing in person the properties that you are interested in, and ultimately helping you make an offer on a property and guiding you through the closing process.

If you are not currently working with an agent, I would be more than happy to help you. I am quite familiar with the La Crescenta area, having lived here in Northeast LA (specifically Eagle Rock) for nearly 20 years. If you would like some help locating some available properties, please eamil me at .

You can also visit my website at and sign up for a free Listingbook account, which is a service which will notify you of all new listings and price reductions for properties on the market, based on a search criteria that you can modify yourself. It is pretty neat and most of my buyers love it. Let me know, I would be happy to set it up for you.

Hope this info helps.. Thanks, have a good day!

John Barry
Coldwell Banker Residential Brokerage
Sherman Oaks, CA
Cell: 323-810-7976
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