TACOMA PIERCE REAL ESTATE: Foreclosures--Are these bargains for you?
We've all heard of the fantastic price discounts. And today, it is true, most of the best bargains in the market will be found among foreclosed properties. So, if money matters to you, you will be smart to consider the foreclosure market. But not every foreclosure sale is a bargain. A few basic princuiples.
A. There are 3 ways to buy a foreclosed property:
* Before the foreclosure date, negotiate with the owner ( and probably his mortgage bank ) and pay off the mortgage before the auction hammer rings down. Notice of foreclosure is posted at the County Court House and must also be published in a local newspaper. (The Tacoma Daily Index does most of these. You can subscribe.)
Sounds simple and productive. But foreclosure is a difficult, emotinal event and people facing foreclosure of their property range from difficult to insane. Some adamantly refuse to talk to anyone. Others sit and confidantly wait for the Tooth Fairy to pay off their mortgage. Still others propose a deal and then miss appointments, fail to keep promises, and iwthdraw at the last moment. You can work with them but you will need to study, develop technique, and be very patient. HOWEVER if the foreclosure victim is a friend of your friend or relative, you might pull off one now and then.
* Buy at the auction. Foreclosure notices and sale dates are posted at the County Court House and also must be advertised in a local paper. (Usually the Tacoma Daily Index. 1019 Pacfic Ave., 98402. ) Auctions are held Friday mornings on the west side of the county city building. If you're in the business you should take one in as a field trip. But keep in mind:
+ People anticipating foreclosure tend to be lax about home maintenance. Some are destructive. In most cases you will not be able to inspect before the sale date.
+ You, or your banker, will have to provide cash or proof of funds to close at the auction even though you can't know your price in advance.
+ Any property can be withdrawn from the auction at any time either by curing the default or by a mutual agreement to postpone the foreclosure. I have seen properties pulled by a cellphone call just as the auctioneer was calling up the property for sale. Hugely dissappointing to the gaggle of bidders each of whom had expended considerable research and preparation.
+ Many properties have multiple mortgages and yet you'll be bidding for only one. You will need to be clear on the status of other mortgages and liens.
+ There are men in Pierce County who have made fortunes buying at auction. But it's not easy. And most first mortgage holders will show up and bid the amount due on the mortgage. This means to take the property, your minimum bid will be the mortgage balance. If the property is worth $100 over the mortgage balance, why doesn't the owner at least sell his equity for $100? etc. Many times, the bank will outbid you, inspect the property for the first time, and then market the place for less than the mortgage amount.
* Buy a listed property. After the bank or investor have control of the property, they usually put it up for sale; usually requiring some degree of fix-up. You won't find the rock bottom price here, but THERE WILL USUALLY BE SOME GOOD BARGAINS. And a listed property offers several important advantages:
_ You get to see the place inside and out before you offer. And you can have the privelige of a thorough, professional before your deal is final. You will have title insurance.Also, you can have your lawyer review all documents.
_ Your offer can be subject to your obtaining financing; the property will be held until you have a loan in place. But the bank can toss your offer out the day before closing and give it to another buyer who offers a lower price but all cash. (See below.)*
_ You'll probably be working with a buyer's agent who should be well-prepared to help you compare the advantage of any particular foreclosure property with other foreclosures past and present as well as home for sale that are not foreclosures. Remember, just because it's a foreclosure it is not automatically a good deal for you. Particularly as motivated sellers are learning that they must compete with the foreclosure market.
In short, buying a foreclosure property
could save you significant money. The process however is nearly the same as buying any property. Working with your Buyer's Agent develop a clear list of the qualities and amennities that are important to you, compare the values and the costs of the several homes you are considering, and always think about how you (or your tenant) will respond emotionally to the home.
* FOR A COMPENDIUM OF PROBLEMS IN BUYING FORECLOSURE PROPERTIES LISTED FOR SALE BY BANKS Please GOOGLE: Homes and Wealth active:buying foreclosure properties.
TACOMA PIERCE REAL ESTATE: Foreclosures--are these bargains for you?
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