With the laws that govern the practice of foreclosing on real property varying from state to state, it can be highly confusing attempting to understand the procedures involved in the process. Unless you know of benchmark cases that have set precedence in the state you are interested in pursuing buying foreclosed property, you will need to investigate the local ordinances and laws governing such pursuits.
Foreclosure is the process a bank, lending company, or realty company enacts against the owners of a specific piece of property or property location. If the person or persons attempting to purchase the property are in default or are expecting to be in default of the loan, the property, having been the recipient of a lien in lieu of payment on the full balance of the loan is then seized and offered up for re-sale, often at a fraction of the original cost.
The three main types of foreclosure sales are on properties owned exclusively by a real estate company, pre-foreclosure sales, and foreclosure auctions. Paying close attention to the real estate market and the financial market at the time you wish to purchase foreclosed property is imperative to obtaining the best monetary deal. Prior to the property being foreclosed is the choice time for novice buyers to begin their adventure into property buying? This is when the owner attempts to sell the property below the previously appraised value which most usually begins at 70% to 80% below the appraisal amount. Paying more than 70% of this appraisal is not advised yet if necessary for an excellent buy, should be arranged.
As a novice, attending foreclosure auctions as a means of acquiring property is not the best route when indulging in property buying. With a high chance of the lender attending the auction as well, which most often results in the property being bought by the lender due to a low selling price being expected, you can expect either a high price or a battle in auction. Payment is required shortly following the end of the auction by cash or certified check, without the buyer being permitted to inspect the property. This can result in conflicting events if there are currently tenants in the property or if it is in below average condition.
Real estate company sales of foreclosed property are the safest option, but without a generous amount of research, you may find yourself on the bad side of the deal. Your research should include, but not be limited to, the current market on surrounding homes within the area and of like models. Being aware of the amounts that most homes similar to your prospective home are being sold for is imperative to gaining an insight on the worth of the foreclosed home.
Fully inspect the home before making your final decision on purchasing, since most foreclosed homes sold by real estate companies are owned by another lending institution or a bank, which is a positive effect in that the title can now be bought clear, but most of the properties are sold 'as is'. This could require the need for making repairs before or after the property is bought. As with any financial investment, whether this is your first home or one of many, seek the advice of an expert and gain as much self-knowledge concerning the matter as possible.
Elaine Stewart - Remax Real Estate Consultants
760 391-4415
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