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Foreclosure in Patchogue : Real Estate Advice

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Mon Mar 3, 2008
Don Tepper answered:
Work with a real estate agent familiar with foreclosures and preforeclosures.

Those are actually two different categories. Preforclosures are still owned by the person who bought the house. They're behind on their mortgage payments. At a certain point in the process--it depends, but it's often after 3 or so missed payments--the bank begins the foreclosure process. Notices are published in newspapers, for instance. Generally, though it depends on jurisdiction, at any point up until the house is actually foreclosed upon, the house can be sold by the owner. If the owner owes more than the house is worth--and more than the offer--that results in a short sale. Say the owner owes $300,000, but the house is only worth $250,000. Someone offers to buy the house for $250,000. The bank would have to approve it--would have to agree to accept less than is owed. That's a short sale. Now, it's also possible that someone owes $300,000, but the house is worth $450,000. In that case, you might buy the house for $300,000, plus whatever is owed from back payments, legal fees, penalties, etc. You wouldn't need the lender's approval for that; you'd simply buy the house for, say, $325,000.

Once a foreclosure has actually taken place, the bank owns the house. It's called an "REO" (real estate owned) property. Now, if you want the house, you'd buy it from the bank.

Preforeclosures are a matter of public record; notices are published in newspapers. Some investors also compile and sell lists of such properties. I subscribe to one, for instance; it costs me $10 a month to receive daily listings of all preforclosures in Fairfax County, Virginia.

REO property ultimately gets listed on the MLS. However, many lenders have listings of REO properties on their own Web sites.

A Realtor in your area can tell you more. Just make sure you work with one with experience in those areas.

Hope that helps.
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