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Step 1
Default ~ This is the time when the owner has failed to make payments and the mortgage holder has issued a "Notice of Default" (NOD). The owner has 90 days from the issuance of the NOD to take action that will prevent the foreclosure. The owner also has 25 days after the publication of a Foreclosure Auction date to take action that will prevent the foreclosure. **Note to buyers** This is not a time to find bargains on quality homes because the owner still has many options to reverse the process. Properties sold during this time have generally been assessed less valuable than the cost of reversing the default process.
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Step 2
Public Foreclosure Auction ~ After the Default period has passed without effective action by the property owner to reverse the foreclosure process, a date will be set for a public foreclosure auction. In a public foreclosure auction, the public is allowed to bid on and purchase the property and MUST PAY IN FULL BY CASH OR CASHIER'S CHECK. Check with the auction agency to determine the deposit requirement due at auction's close. These properties are sold "as-is" without any promise of value and little or no opportunity for a building inspector's appraisal. While great deals can be found at this stage, there is also a great deal of risk to auction bidders. ***Note to Buyers*** The orginal property owner still has 25 days to reverse the foreclosure process after the date for public foreclosure auction has been published. For this reason, these auctions are often canceled at the last moment.
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Step 3
Real Estate Owned (REO) ~ If a property is not purchased at a public foreclosure auction, ownership of the property is assumed by the lender. The lender must assume responsibility for the upkeep and taxes of the property. Lenders in this position may attempt to sell the property on their own or to acquire representation through a Real Estate Broker. In either case, the lender is generally willing to turn the property over quicly for little profit, rather than continue to invest in upkeep or to risk damage to an unoccupied property. This is the best stage for finding great real-estate deals. Not only is the price generally at or near it's lowest, but dealing directly with a lender, you may be able to negotiate more favorable lending terms.
Comments
Cherrie said
on 11/26/2008 I like your warning to buy "as is" because there can be prior legal situations which pop up after foreclosure and make the buy worthless. Thanks, I learned a lot.
Cherrie said
on 11/26/2008 I like your warning to buy "as is" because there can be prior legal situations which pop up after foreclosure and make the buy worthless. Thanks, I learned a lot.
LNAngel said
on 7/9/2008 Very good advice here!
nethopperz said
on 7/9/2008 Good article! There are a lot of opportunities to find foreclosed homes right now.
LilacGirl said
on 7/9/2008 I learned a lot from this well-written and very informative article.