Home buyers who want a good deal in real estate invariably think first about pursuing foreclosures. Buyers have this picture in their mind of a cute little house, surrounded by a white picket fence that is owned by a widowed mom who fell on hard times, but that scenario is generally far from reality.
Why Do Sellers Go Into Foreclosure?
Sellers stop making payments for a host of reasons. Few choose to go into foreclosure voluntarily. It's often an unpredictable result from one of the following:
•· Laid-off, fired or quit job
•· Inability to continue working due to medical conditions
•· Excessive debt and mounting bill obligations
•· Squabbles with co-owner, divorce
•· Job transfer to another state
Negotiating Directly with Sellers in Foreclosure
Investors often prefer to purchase these homes before the foreclosure proceedings are final. Before approaching a seller in distress, consider:
Foreclosure proceedings vary from state to state. In states where mortgages are used, home owners can end up staying in the property for almost a year; whereas in states where trust deeds are used, trustee sales give a seller about four months before she needs to vacate.
•2. Almost every state provides for some period of redemption. This means the seller has an irrevocable right during a certain length of time to cure the default, including paying all foreclosure costs, back interest and missed principal payments, to regain control of the property. For more information, consult a real estate lawyer.
•3. Many states also require that buyers give to sellers certain disclosures regarding equity purchases. Failure to provide those notices and to prepare offers on the required paperwork can result in fines, lawsuits or even revocation of sale.
•4. Determine whether you're the type of person who can easily take advantage of a seller's misfortune under these circumstances and / or put a family out on the street. Oh, critics will argue it's just business and sellers deserve what they get, even if it's five cents on the dollar. Others will feign compassion and trick themselves into believing they are "helping" the home owners avoid further embarrassment, but deep inside yourself, you know that's not true.
Buying a Home at the Trustee's Sale
Check with your local county office to find out how sales in your area are handled, but common threads among most of them are:
•· No loan contingency
•· Sealed bids
•· Proof of financial qualifications
•· Sizeable earnest money deposits
•· Purchase property "as is"
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