Positive Aspects of Purchasing a Property in Foreclosure

Bidding at the county courthouse is one way to purchase a property in foreclosure. The trustee, auction or sheriff sale marks the second stage of the foreclosure process. Before the auction the property is considered to be in pre-foreclosure which begins when the first legal document, the Notice of Default or the Lis Pendens is received by the homeowner. If the property is not sold in the auction, it is repossessed by the bank.

There are advantages when buying a property in foreclosure. It is a lot easier than buying an already foreclosed property. When purchasing a property in foreclosure, the owner still occupies the property, therefore, questions about the property can be directed to the owner. The prospective buyer can make a full inspection on the property and really kick the tires, so to speak, and short sale is very possible.

In many cases, the buyer can get a better deal because the bank does not have to invest with the same amount of money in a short sale as they do on a foreclosure.

A pre-foreclosure is when the owner missed three payments on the property and the foreclosure process begins while short sale is when the property is sold short. This is when the bank accepts less than what is owed in the mortgage as the payment in full.

How much below mortgage can someone expect to purchase a property in pre-foreclosure for? There is about five to 25%.

The other opportunity is to buy a bank owned property and those are the ones that have gone all the way through the foreclosure process and have been taken back by the bank. In today’s market, it is recommended to look at the bank-owned properties first. This is especially true for those looking for a property to live in for good reasons. Buying a bank owned property means a safe purchase for the buyer, the title has been cleared, minor work has been done on the house by the bank depending on the part of the country you are in, and they can give you a discount depending on the condition of the house it is in.

Professional investor, on the other hand, opts to buy the properties in foreclosure in the courthouse since they can risk some significant amount of money. This is not advisable for an individual buyer looking for a home for his family unless he really understands the risks involved. The downside of buying a property in foreclosure in the courthouse is that you will have to take the property as it is. Aside from having to pay the property in cash, the purchaser will have to be liable for all the liens the property. Make a diligent research on how many mortgages are there on the property you are eyeing on. Title companies that specialize in doing that research since researching it on your own is very time consuming.

Finally, to help you find a property on a foreclosure, Realtor can help a great deal since they can deal with banks and make short sale in your behalf.