Should You Buy A Foreclosure?
The media bombard us daily with the numbers of homes which are in mortgage difficulties. Perhaps, you have wondered if you should get involved in purchasing such a property. The first thing you should realize is that the answer to that question depends on your patience and how much money you have to invest.
Typically, there are 4 steps involved in the foreclosure process and potentially you could become involved in any one of these steps. The typical 4 steps are:
1) Preforeclosure, when the property goes into default and the homeowner is given a 90 day notice to come current on the mortgage, work out a plan with the lender - possible "Short Sale" of the property or there will be a Trustee Sale.
2) Scheduled Trustee Sale - usually when this happens, due to restrictive rules involved in the sale, an individual could purchase it but the lender usually buys the property. For an individual to buy you have to pay $10,000 on the day of the sale and have a cashier's check for the full balance of the sale by 5 p.m. the following day.
3) Lender Ownership
4) Sale on the Open Market- at this point you see properties advertised as Bank Owned or REO's.
There are many of these properties currently on the market. What should you consider, if you want to buy one?
1) How important is location in getting the price you want? The best buys may not be where you want to live.
2) What condition do you want the property to be in-these properties are generally sold "as is" and may need substantial repairs?
3) How much cash do you have available? Down payment plus fix-up?
4) What is your timing? Much patience can be required in waiting for a response from a lender (particularly with a "short sale") response time can be many weeks or months with no guarantee that after waiting you will even get the property. A bank-owned property can be a shorter wait time and a better possibility for your sale to make it through the process to completion.
With the abundance of inventory on the market, there is a possibility that you could negotiate as "good a deal" with an owner who is not in trouble but is anxious to sell.
One way or the other, whichever you choose, it is a good time to get involved and there are bargains to be had!!!!