Tech Tip for a Thursday – How to Search for Foreclosures

There is a little misconception with buyers and investors about what a “foreclosure” is.  There are several different types of sales that buyers tend to blend into one.

Short sale – typically pre-foreclosure or in the foreclosure process

  1. The seller still owns the property and needs to ask permission to sell at the sales price because they owe more that what it is currently worth.  A short sale can take place before a seller actually receives any notification from the bank about a foreclosure.
  2. Because the seller still owns the property they are required by law to disclose any facts that might materially affect the value of the home.  So although you still need to conduct your own home inspection and ensure a clear title with your title company – there are less apparent risks.
  3. These take time due to the number of people involved in the process.  However, patience can pay off in the long run!

Bank Owned – this property has gone through the foreclosure and now a bank owns the property.  Also known as REO (real estate owned).  This means that you are dealing with the new owner – the bank.  A lot of times, the new owner is the bank that held the previous mortgage on the property; but not always.

  1. These are typically sold a great discount and much less than market value of a traditional sale – sometimes 30-50% less.
  2. However, in this situation the bank has no knowledge of the home and therefore you go in with little knowledge about the home except what you can gain from a home inspection.
  3. These can close quickly – the banks prefer that you do!

Foreclosure sale – This is a sale that takes place by the clerk of courts in order to satisfy the judgment.  If you are interested in bidding on a foreclosure sale you can do so here:

  1. These properties are sold “AS IS” and bidders are responsible for all research to determine any potential liens or defects of title.   BUYER BEWARE as they say!
  2. While anyone can bid on a foreclosure it takes a great deal of time to search them out and wait for the date of sale.

For most buyers, the best way to get a great deal is to just buy an active listing – one that has already been foreclosed upon, a short sale priced just right, or even a traditional seller that is motivated.  The “great deal” that most buyers are searching for is all around them.  We are looking at historic affordability and historic interest rates – don’t hesitate to buy a home while the opportunity is knocking.

Click here to search actively listed bank owned homes and click here to search actively listed short sales.


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