In today's market, buyers are looking for the "killer deal", and I am constantly finding clients who want to purchase a home that is a "foreclosure".
I understand their point of view and respect the fact that they are looking out for their best interest or at least they think they are. One of the problems with this strategy arises from the fact that many people don't clearly understand what a foreclosure is, they use the term to refer to everything from a Short Sale to a property sold at Auction or an REO.
So what are the differences?
A foreclosure is a legal process in which, real property is sold to satisfy a public or private debt for which the real property has been pledged as security.Usually this happens against the wishes of the owner.
This process begins with the Notice of Default (and it varies according to local state law) but if not resolved it will end in what is called at a Trustee Sale (also called Auction)
When the property ends up belonging to the holder of the note (lender) it is called an REO (real Estate Owned). And many times it is then given to a Listing agent to be put on the market for sale.
The fact that a home might be in a foreclosure process does not necesarily mean it is currently on the market or that it will be sometime soon, in many cases, homeowner solve their delinquencies and that is the end of it.
It is also important to point out that depending on whether you are buying a property at a Trustee Sale, an REO, Short Sale etc, make sure that you are working with reputable agents that can guide you through the process, the are very different from each other and each has its own time-lines, requirements and implications, it is always important to know what you are getting yourself into before you begin.
Lastly I mentioned the Short Sale. Basically it is when your property is worth less than the total mortgage you owe on it. If you want to sell your home in this situation it will have to be approved by the lenders and there might be a tax implication for the seller of such property.
There is a lot to talk about on the subject if you have any questions contact me.
Have a GREAT weekend!
Rina Podolsky
Remember if you are thinking of buying or selling a home I would like to apply for the job!
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