How To Buy A Pre-Foreclosure
LetÃƒÂ‚Ã‚Â’s face it, the real estate market is in shambles and many homes are getting sold through foreclosure because people are unable to pay their mortgage on time. Before letting you know about buying a pre-foreclosure home, let me explain what pre-foreclosure really is.
When a person gets behind on their mortgage payments the lender will file a public default notice, which will initiate the foreclosure process. In other words, itÃƒÂ‚Ã‚Â’s a grace period. TheyÃƒÂ‚Ã‚Â’re [the homeowner] is being warned, but the only thing they are able to do at this point is sell it to recoup their costs. Usually this grace period is about six months, but it various by state laws.
Since the homeowner is desperate to sell their house, there is a good chance you can end up paying more than if the lender is selling the home. The lender just wants to get rid of the property as fast as possible.
As a buyer, you will need access to a list of foreclosures thatÃƒÂ‚Ã‚Â’s going on in your area. Once youÃƒÂ‚Ã‚Â’ve checked out the information on the houses that you are interested itÃƒÂ‚Ã‚Â’s time to start knocking on doors.
Check out the properties and see the condition of the home and how good the neighborhood is. You might even talk with the homeowner a little bit as well.
Make sure the property is still in default. There are times when the homeowner has fixed the problem and their home might not end up in foreclosure. To find this out ask either the trustee- this is the person who is filing the paperwork to carry out the foreclosure on the property.
See if there really is a bargain. WhatÃƒÂ‚Ã‚Â’s left on the loan balance? Is the home worth the price? Is the home being sold ÃƒÂ‚Ã‚Â“as isÃƒÂ‚Ã‚Â”? How much are you able to afford? All these things you need to find out before buying a home.
Then comes the tough part. Contacting the owner. If you have their e-mail send an e-mail or mail them a letter. Nicely let them know that you are interested in their property. If they agree, try to arrange a meeting to talk about their home, discuss a possible sale and youÃƒÂ‚Ã‚Â’ll also have the chance to get an even better look at their home. You want to make sure that the home is exactly what you are looking for.
Discuss and negotiate an agreement if you purchase the home. As a buyer, try and get at least 20 percent before full market value, you may even get a better deal.
Before closing the deal, Frontdoor.com has a few tips for buyers:
- Contact the foreclosing lender and any other lien holders and let them know you plan on buying the house. You may be able to negotiate a lower payoff amount to satisfy the debts owed, meaning you may not have to pay off the entire debt amount. To learn more about negotiating a short sale, read this. A real estate agent can also be a valuable resource during the negotiating process.
- If the loan in default is assumable, you may be able to pay off the amount in default and take over payments under the current terms of that loan.
- If not, you will need to pay off the full amount owed on the loan. If the property has other liens placed on it, you'll need to make sure those are cleared out as part of the purchase agreement.
If youÃƒÂ‚Ã‚Â’re happy with the asking price and the home itÃƒÂ‚Ã‚Â’s time to close the deal and put your agreement in writing. Try and ask a real estate agent or attorney to draw up the purchase agreement, unless you already know how to do so.
The purchase agreement needs to have the following: A full title search conducted by a title company or attorney and a professional inspection of the property.
If needed an escrow company can mange the transfer of money and property of ownership.