Short Sale, Foreclosed, Auction, & REO Properties - Know the difference BEFORE you start your search

There are certainly some good deals out there but be very careful what you choose to purchase and be willing to follow the bank's addendum to the T and the requirements to submit an offer is a different requirement in most cases.   Just know the difference between the types of Foreclosure resulted sales.  The bottom line is that property is sold, just make sure you are aware of what you are buying.

Pre-Foreclosure sale:  If you want to negotiate a pre-foreclosure sale, remember that property owners who fall behind in their mortgage payments are frequently unable to property maintain the home, and phones and electricity may be shut off.  This process is called Short Sale because most properties that are behind in the mortgage are also short on equity. These properties are sold "as is" but there are disclosure requirements and you can luck up on some properties that are in pretty good shape.  And you can view the property prior to making an offer.

REO properties: Properties that have been taken back by the lender. The safest bet for those new to the process of finding REO properties  (properties that have been taken back by the lender).  They have been cleared of liens and taxes, and any tenants have already moved on.  Most large lenders have departments who deal with this type of property.

The homeowners are usually forced out and will probably leave the property in pretty bad shape.  You can view these properties and can get an home inspection if you are fast because most banks will only allow 4/5 days to get an inspection and they don't like taking offers contingent on the inspections because they have no intentions of crediting or paying for repairs on the property.

Pay close attention to the fact that you are purchasing the property in "as is" status and the odds are the property will not be in tip top shape or you can bet that the list price will reflect that the property is in good shape, but still it will be sold as is.  Nothing much will be disclosed because REO properties are exempt for the normal California Disclosure laws.  REOs are at least free of liens and there are no tenants to be removed - because the bank take care of that before they put it on the market. They look it like this:  How would the bank know, they did not live in the property.

The odds are better for you if you purchase an REO rather than taking a chance at an auction, in my opinion.I will write more on REOs and the submit an offer process later.

Foreclosure Sales and Auctions: Properties sold at foreclosure sales and auctions are sold "as is", and must be repaired, often at considerable cost, before they can be resold on the market.  Potential buyers of auction properties may not have the opportunity to inspect the property before purchase and of course no repairs will be credited or repaired.

Foreclosure properties may also be encumbered by tax and other liens, which become the responsibility of the owner after a foreclosure sale.  It is likely that these homes cannot be covered by title insurance, so research, research, research is the key to uncovering the secrets of a foreclosed property before purchase.

Watch for HUD auctions, but don't expect to be the only one in line.

Need a Short Sale Specialist? 

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Check out: Real Estate Terms/Definitions.  And take a look at Mother and Daughter Blog and D'Adrea's Mother and Daughter Blog  - for other tips for Sellers and Buyers. I work with my daughter as the Mother and Daughter Real Estate Team at Perfect Financial Solutions and we also focus in Short Sales and the Pre-Foreclosure process.  Our consultations are free.  Our aggressive marketing plan includes on-line listing advertising.  If you are thinking of selling or buying a home in Northern California's Central Valley (San Joaquin County CA - includes Stockton, Manteca, Tracy, Lathrop) plus Stanislaus County CA - includes Modesto, Salida, Riverbank) & the East Bay (Alameda County CA - includes Hayward, Fremont, Newark, Union City & Oakland) and surrounding areas give us a call.  If you would like a FREE Home Seller or Home Buyer Handbook, please call us at 866-750-8282 or email at US.

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