Yes, there are often a lot of last minute surprises. We don't recommend a buyer buy a foreclosure to live in unless they know they can deal with major date changes or surprises. There is a price to pay for the good price! The contract addendum's are often very, VERY one sided also.

Thank you for your response, Brian.  I would love some specifics.  Can you give me some, please?

I was really hoping for some fast, good answers, as I am conferring with a client in an hour and I am supposed to know!  My attorneys are either in court or at lunch.  Help!  Jeffrey, where are you?

Mirela, post this in the foreclosures group or check out the group and PM some of the members that work in foreclosures.  It might be too late now that I read your last comment..

http://activerain.com/groups/ForeclosureFocusUSA

Hope this catches you in time. Purchasing foreclosures is usually pretty easy. My market is about 70% foreclosures right now - we're the #1 area in California for REO's. Most agents here won't even mess with short sales because of the delays and bank recalcitrance - we just wait 2 or 3 months until it goes back to the bank and buy it from them.

Yes you do buy as-is but that doesn't mean no inspections or contingencies. The buyer always has the right to inspection and if they uncover anything they don't like they can bail. As-is simply means you agree to take the property like you find it, dead lawn and all so you better know what as-is-is so you don't get any nasty surprises.

Further, the property (a least in California) is free and clear of any prior liens and encumbrances. The seller/lender pays everything current to COE just as in a normal sale. The main difference is the lack of disclosure. Again in Cali we have extensive disclosures since we don't have attorneys as part of the transaction and a lender is not required to fill those out since they have no actual knowledge of the property - so again, the burden shifts to the buyer to determine if the tax rate is agreeable, is there an HOA, death on the property, corners marked, septic or well considerations, etc. Due diligence stuff.

Out here the banks are usually easy to deal with since they want to get rid of that inventory. They'll frequently help w/closing costs, adhere very closely to a COE timeframe etc. They will demand you use their contracted escrow and title agents but they typically pay 3% commission to the buyers agent so all in all, a pretty easy transaction. Good luck.

By the way, I'll be happy to talk to you about sending an occasional missive to your company site. EM me. Thanks

Gene, thank you very much!  I sincerely appreciate it!

Mirela- just email me or call me next time.  It depends on the state and it has been awile since I took back a property in South Carolina.

I can give you the run down as far as NY goes.

All liens are extinguished by the foreclosure unless the liens we places on the property before the foreclosing parties liens-  In S.C. this is also the case.

All taxes are paid current by the foreclosing party when they transfer the deed.  - Check this out in S.C.

No disclosure in NY

Buildings are bought as is, no c/o inspections allowed.  So a buyer may purchase with open violations.

There is also a big difference if your clients is buying a foreclosure or an REO, they are not the same.  Reo's are safer, foreclosures may be cheaper but have more risk.  Email me for my im address

I can only speak for Virginia, but I have no problems introducing a Buyer to a Foreclosure.  The title will pass as a Sheriff's Deed, in VA; meaning that the deed is only warrantied from the time the bank took title to the time the Buyer closes on the house.  A title search usually finds any other clouds on title.  All liens except tax liens are usually wiped clean with a Foreclosure.  If a HOA tries to come after a new home owner for back HOA dues, the HOA usually doesn't have much of a chance of collecting from the new owner.  The property is conveyed "As-Is," but in VA we can still do home inspections and still get out of the contract b/c of the home inspection results.  Mechanics liens can also still be filed on the property after the Foreclosure and the new home owner needs to be aware of that.  I always close at an attorney's office when I do a Foreclosure.  It's best to have an attorney for the Buyer looking over the paperwork.  The closing date on a foreclosure is usually pushed back at least once and the bank is not penalized for not closing on time; however, the Buyer will be penalized for not closing on time.  It is best to find an attorney in your area to go over the states foreclosure process with you.  But, it really isn't that bad and your client can get a good deal! 

Some good comments and information here.  I currently have a contract with a buyer on a bank owned property.  So far so good  but we will see.

Dear Jeffrey,

As usual, you are a wealth of informatin on this subject.  Thank you so much for your input! 

I did not understand the following:

"All liens are extinguished by the foreclosure unless the liens we places on the property before the foreclosing parties liens-  In S.C. this is also the case."

If you have a moment, could you elaborate? 

I am excited about the website!   I will check it out shortly.  I have not had a chance to AR; I've been putting in some grueling hours this week, with not time for lunch or dinner, or anything else.  We have a lot of activity at the beach right now.

Again, thank you Jeffrey!

Sarah and Stella,

Thank you for your input!

Liens have positions on the title to property, 1st, 2nd, 3rd etc.  A 2nd mortgage lien holder can foreclose on a property but their foreclosure action is subject to the lien of the 1st lienholder.  So if someone where to buy the home at the auction they would still have to pay off the 1st mortgage lienholder.

Conversely if a 2nd lienholder where to foreclose on a property with 3 or more mortgage liens then every lien, mortgage or not, with the exception of taxes recorded of record on the property after the date of 2nd mortgage would be exstinguished by the foreclosure action of the second mortgage holder.

So when a 1st postion mortgage holder forecloses they extinguish all liens that are subsquent to them with the exception of taxes. 

Need more detail email me for my instant messanger id

Thank you, Jeffrey! 

I think you should write a book about shortsales, foreclosurea and REO's.  I'll buy it!

Great comments.  Each situation is different.   Just sold a Freddie Mac listing that had been totaled remodeled.  That was an easy sale.   Working on another deal now  .and the bank turned down a full price offer.  The listing agent says that the bank wants an offer as is, with no contigencies, not even an inspection right.  My buyer has re-submitted and offer, without inspection, but signnificantly lowered the offer price. 

And you never know what to expect,  I was previewing a bank owned in a nice, upscale neighborhood, and there were rats in the attic!