Foreclosure Sale

Home buying from a foreclosure sale is certainly a lucrative proposition. Good and unaffordable properties in prime locations hitherto have been listed under foreclosure sale, due to various circumstances – default in repayment of their home loan being the very first reason. In all the States of US the foreclosure crisis has swept through, rendering millions of families to forfeit their equities to foreclosure and as on date there are 1,767,658 properties lying under various stages of foreclosures.

Generally there are three stages in the foreclosure process and depending upon the stage at which the property concerned is lying, the methods adopted for buying a property from foreclosure sale differs.

1. Pre-foreclosure stage: From the date of Notice of Default or the Court proceedings known as Lis Pendence, there is time till the property is disposed off by the mortgage lender through public auction. This may be 4 months to one year, according to law of the State and the home owner has a chance to redeem the property by paying off the outstanding home loan.
2. Actual foreclosure by public auction: After a default notice is sent and not complied with the barrower, the mortgage lender gets the right to dispose off the property through public auction, to realize the balance amount outstanding – either through a Sheriff’s sale at the Court or a Trustee Sale. On the date of public auction, any third party can bid for the property and the highest bidder is awarded the ownership of the property.
3. Repossession by mortgage lender: In the event of the minimum bid not forthcoming at the public auction, the mortgage lender takes possession of the property concerned towards the dues thereon. This will give the right of ownership to the mortgage lender to sell off the property to any buyer at the selling price fixed.

Now if you are interested in buying a home under foreclosure sale, you can do so at any of the stages. It is recommended if you are a first time home buyer, to enlist the support of a Buying Agent (any Real Estate Agent with experience in buying from foreclosures). In the first stage of pre-foreclosure, the distressed home owner who has already got the default notice can be contacted directly for negotiation. With a convincing negotiation, the home owner will be too willing to sell of the property, to avoid foreclosure and thereby save a black mark in the individual’s credit history. Good bargains lye here for serious buyer with sound financial background.

The second stage of bidding in the public auction provides scope for buying the property at a price far less than the real value and the minimum bid is only the outstanding loan amount on the property. The only hurdle is bidders are expected to make immediate full payment of the bid amount and they have to pay earnest deposit prior to public auction.

The third option of buying of repossessed properties from Banks as mortgage lenders mostly is hassle free. Buyers with their financial background documents have to approach the Bank concerned and finish the deal of the said property. Reasonable discount in the sale price, which is already less than the fair value and represents the amount outstanding to the bank, can be expected. Further there is scope for bargain on the money to be paid up-front, interest rate to be charged for balance amount over a period and processing fees etc. Properties will be with clear titles and will have no encumbrances, liens attached or tax due on them, as they would have been cleared in full by the bank at the time of taking repossession.

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