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Foreclosure overview and buying opportunities

By
Real Estate Agent with Keller Williams Premier Realty MN 20549720

What is Foreclosure?

Foreclosure is a process that allows a lender to recover the amount owed on a defaulted loan by selling or taking ownership (repossession) of the property securing the loan. The foreclosure process begins when a borrower/owner defaults on loan payments (usually mortgage payments) and the lender files a public default notice. The foreclosure process can end one of four ways:
  1. The borrower/owner pays off the default amount to reinstate the loan during a grace period determined by state laws. This grace period is also known as pre-foreclosure.
  2. The borrower/owner sells the property to a third party during pre-foreclosure. The sale allows the borrower/owner to pay off the loan and avoid having a foreclosure on his or her credit history.
  3. A third party buys the property at a public auction at the end of pre-foreclosure.
  4. The lender takes ownership of the property, usually with the intent to re-sell. The lender can take ownership through an agreement with the borrower/owner during pre-foreclosure or by buying back the property at the public auction. These are also known as bank-owned properties.
The foreclosure process presents three bargain-buying opportunities.
Pre-Foreclosure (Notice of Default, Lis Pendens):
Buying a property in pre-foreclosure involves approaching the borrower/owner and offering to buy the property. The borrower/owner can walk away with something to show for any equity in the property and avoid a bad mark on his or her credit history. The buyer has time to research the title and condition of the property and can realize discounts of 20-40 percent below market value.
Auction (Notice of Trustee Sale, Notice of Foreclosure Sale):
If the loan is not reinstated by the end of the pre-foreclosure period, potential buyers can bid on the property at a public auction. Buyers often are required to pay in cash at the auction and may not have much time to research the title and condition of the property beforehand; however, a public auction often offers some of the best bargains and avoids the unpredictability of dealing directly with the borrower/owner.
Bank-owned (Real Estate Owned):
If the lender takes ownership of the property, either through an agreement with the owner during pre-foreclosure or at the public auction, the lender will usually want to re-sell the property to recover the unpaid loan amount. The lender will probably make sure the title is clear for any buyer, but the potential bargain is typically less than a pre-foreclosure or auction property. Source: RealtyTrac | Published: Jul 28, 2010 Thank You for taking the time to visit my blog today. For additional information and assistance with your real estate questions please contact -

Rochelle Allison

651-259-4683 Rochelle@RochelleAllison.com
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Rochelle AllisonThanks for reading our St Paul Real Estate Blog! I am a Realtor in the St Paul and Minneapolist area.  I love living in St Paul where the awesome neighborhoods and beautiful homes are my passion.  Our team works with buyers, sellers and investors.  

My concentration on homes for sale includes not only St Paul and Minneapolis, and also the surrounding Twin Cities and Western Wisconsin areas.  For more information on me or our awesome area, visit my website or email me at rochelle@rochelleallison.com.  When you're ready to sell or buy a home - we would love to help! To read what my clients have to say about us and our service, visit my Client Testimonial page.

 

Relocating to the Twin Cities?  Contact the Rochelle Allison Real Estate Team for information on moving to St. Paul and Minneapolis.  651.259.4683

Posted By: Rochelle Allison, REALTOR, specializing in St. Paul and Minneapolis Real Estate   651.259.4683 

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