Thinking About Buying a Foreclosure - Part 2

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Real Estate Agent with Lisa Von Domek & Associates LLC, Real Estate Broker/Associate with Real Living Real Estate Group www.LisaVon.com TX License #0552989

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Pre-Foreclosure

A pre-foreclosure is when you buy the home directly from the homeowner, before the bank officially forecloses. This type of purchase does not require as much capital as other foreclosures. Also, since you are purchasing straight from the homeowner, you will be able to gather all of the necessary information, such as inspection reports, title information, etc. that may not be available with other foreclosure properties. Once you take over the mortgage, you will be responsible for all future payments as well as any overdue back payments.

Auction

A foreclosure property will usually end up at an auction. Real estate auction practices vary by state but common practice is for the auction to be held on courthouse steps, in front of the foreclosed home, or at the county clerk’s office.

Real estate auctions offer the best chance for a great deal but also hold the greatest risk. Auction properties are sold as is, with no opportunity for potential buyers to perform inspections. When buying a home at auction, the buyer must pay cash, usually a cahiers’ check. It is also possible that there may still be tenants living in the home. In such a case, you would be responsible for the often costly eviction process.

REO

Once a foreclosure has gone to auction and failed to sell, it becomes a Real Estate Owned, or bank owned, property. Most homes do not sell at auction, most fail to even get any bids.

An REO property is the least likely of the foreclosure properties to represent a bargain, but it is also the least risky. The property can be fully inspected, any title issues can be found and dealt with, and the sale can be subject to a mortgage. REO properties also tend to be in better condition than other foreclosure properties.

Another thing to keep in mind when purchasing a foreclosure is that some states have a redemption period that allows the original owner to buy back the property by paying the remaining balance owed. You may be able to have this redemption period waived, so check the state laws on this topic before purchasing.

Still interested in buying a foreclosure property? If so, always do your research before purchasing!

 

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  1. Diane Duffy 03/10/2012 11:15 AM
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Show All Comments
Rainmaker
1,711,716
Lou Ludwig
Ludwig & Associates - Boca Raton, FL
CRB, CRS, CIPS, GRI, SRES, TRC, e-PRO

Lisa

I like your post's today about buying a foreclosures. Good stuff.

Good luck and success.

Lou Ludwig

March 04, 2012 06:55 PM #1
Rainmaker
905,899
Joe Petrowsky
Mortgage Consultant, Right Trac Financial Group, Inc. NMLS # 2709 - Manchester, CT
Your Mortgage Consultant for Life

Even though I have bought hundreds of foreclosed properties in my house flipping career. I still hire pros around me, like an attorney, home inspectors, septic inspectors (when appropriate) and someone who will check for any zoning violations.

Great post and thank you for sharing it with all of us.

March 05, 2012 03:18 AM #2
Rainmaker
1,027,869
Conrad Allen
Re/Max Professional Associates - Webster, MA
Webster, Ma, Realtor

Hi Lisa.  Another issue with foreclosure sales is you don't know how much is owed in taxes and other municipal bills.

March 05, 2012 03:46 AM #3
Rainmaker
1,058,431
Lisa Von Domek
Lisa Von Domek & Associates LLC, Real Estate Broker/Associate with Real Living Real Estate Group www.LisaVon.com - Dallas, TX
....Experience Isn't Expensive.... It's Priceless!

Good morning Lou,

Thank you, I am so pleased that you liked this article on foreclosures.  Have a great week!

March 05, 2012 03:54 AM #4
Rainmaker
1,058,431
Lisa Von Domek
Lisa Von Domek & Associates LLC, Real Estate Broker/Associate with Real Living Real Estate Group www.LisaVon.com - Dallas, TX
....Experience Isn't Expensive.... It's Priceless!

Good morning Joe,

Great comments, it is imperative to have all of the professionals one need's in any transaction!

Have a great week!

March 05, 2012 03:55 AM #5
Rainmaker
1,058,431
Lisa Von Domek
Lisa Von Domek & Associates LLC, Real Estate Broker/Associate with Real Living Real Estate Group www.LisaVon.com - Dallas, TX
....Experience Isn't Expensive.... It's Priceless!

Good morning Conrad,

Absolutely, and why it is vital to have the Title search done quickly to verify any liens (in Part 1 of this article).  A large tax bill or mechanic's bill is not something anyone wants to be surprised with!

Have a wonderful week!

March 05, 2012 03:58 AM #6
Rainmaker
1,951,814
Roy Kelley
Retired Real Estate Broker, Maryland Blogger - Gaithersburg, MD
Roy and Dolores Kelley Photographs

Many home buyers are finding purchase opportunities in the inventory of lender owned foreclosures.  It is always a good idea to check to see what is available.

March 05, 2012 05:57 AM #7
Rainmaker
876,742
Wayne Martin
Michael Saunders & Company - Sarasota, FL
Sales Manager - New Homes & Condominiums Division

Nice and concise explanation of the phases of the process. Great post. Enjoy your day!

March 05, 2012 06:08 AM #8
Rainmaker
1,058,431
Lisa Von Domek
Lisa Von Domek & Associates LLC, Real Estate Broker/Associate with Real Living Real Estate Group www.LisaVon.com - Dallas, TX
....Experience Isn't Expensive.... It's Priceless!

Good morning Roy,

Buying a foreclosed home can be a great way to get a property, leave no stone unturned when shopping for that new Dream Home!

Have a wonderful week!

March 05, 2012 06:29 AM #9
Rainmaker
1,058,431
Lisa Von Domek
Lisa Von Domek & Associates LLC, Real Estate Broker/Associate with Real Living Real Estate Group www.LisaVon.com - Dallas, TX
....Experience Isn't Expensive.... It's Priceless!

Good morning Wayne,

Thank you, I am so pleased that you liked this series on Foreclosure homes.

Have a wonderful week!

March 05, 2012 06:30 AM #10
Rainer
145,762
Michael S. Bolton
Michael S. Bolton,Inc. - Zimmerman, MN
MN Appraiser

I like clarity, and you've done a great job in clarifying the different phases of foreclosure. My son just closed on his first house, which was an REO property, and he's pretty "happy."

Have an AWESOME day!

March 06, 2012 06:47 AM #11
Rainmaker
1,058,431
Lisa Von Domek
Lisa Von Domek & Associates LLC, Real Estate Broker/Associate with Real Living Real Estate Group www.LisaVon.com - Dallas, TX
....Experience Isn't Expensive.... It's Priceless!

Good morning Michael,

Congratulations to/on your son's new home - another REO off the books!  And thank you, for stopping in and commenting - I am so pleased that you liked this foreclosure article.

Have a wonderful week!

March 07, 2012 03:53 AM #12
Rainmaker
1,116,164
Rob Thomas
Prestige Homes of The Tri Cities, Inc. CALL....423-341-6954 - Bristol, TN
Bristol TN-VA & Tri Cities Agent, ABR, GRI, e-Pro

If you are thinking about buying a foreclosure in the Dallas area then you definitely need to give Lisa a call!

Have a great night!

March 07, 2012 02:09 PM #13
Rainmaker
1,058,431
Lisa Von Domek
Lisa Von Domek & Associates LLC, Real Estate Broker/Associate with Real Living Real Estate Group www.LisaVon.com - Dallas, TX
....Experience Isn't Expensive.... It's Priceless!

Hello Rob,

Thank you for the wonderful endorsement!  

Have a great night, and a fabulous week!

March 07, 2012 02:21 PM #14
Rainer
143,547
Bill Blankenship
Lisa Von Domek & Associates, LLC / Real Living Real Estate Group - Midlothian, TX

This is a great, information filled 2-part series on foreclosures and REO properties!

March 08, 2012 02:18 AM #15
Rainmaker
1,058,431
Lisa Von Domek
Lisa Von Domek & Associates LLC, Real Estate Broker/Associate with Real Living Real Estate Group www.LisaVon.com - Dallas, TX
....Experience Isn't Expensive.... It's Priceless!

Thank you, Bill - foreclosures and REO's can be difficult, but a well-prepared Buyer will be armed with the tools they need for success when working with an experienced Realtor.

March 08, 2012 02:28 AM #16
Show All Comments
Rainmaker
1,058,431

Lisa Von Domek

....Experience Isn't Expensive.... It's Priceless!
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