In this segment I would like to focus on how one can go about buying a foreclosed house.
There are several stages at which this can happen; pre-foreclosure, foreclosure and post-foreclosure (also referred to as “REO”). These different stages offer differing opportunities and procedures.
If the house is listed as “pre-foreclosure,” that means that the homeowner has received a Notice of Default and that the bank is getting ready to foreclose. You can contact the homeowner directly, if not already represented by a realtor, and start the negotiation process.
If the house is being auctioned off at a sheriff’s sale, you most likely will not have access to the interior of the property to better asses its condition. That is one of the many drawbacks to buying a house at a foreclosure sale. In addition, a title search must also be performed to see if there are any liens having a higher priority than the mortgage note being foreclosed. Otherwise, you may be buying a property subject to a first mortgage, unpaid taxes, judgments and/or liens. You might also be inheriting tenants that you did not know about or desire. Once again, using the services of an experienced attorney is highly recommended at this stage.
Buying a Foreclosed House REO
REO is the banking industry’s acronym for Real Estate Owned. I assume they think it sounds better than “Bank Owned”. This is an opportunity for you to buy the property at a discount. The banks have a huge inventory of REO properties and there are more on the way. The bank maintains the property while in their possession, which assures that it does not deteriorate any further. Such carrying costs are a great motivator for the banks to sell these properties at a deep discount.
If you are interested in buying a foreclosed house contact Franklin Montero.