Buying a foreclosed home offers a lot of opportunities but also raises a lot of questions.

To help you better understand foreclosures, let’s breakdown what it means when a home forecloses, the buying process, and what are the pros and cons of purchasing a foreclosed home.

A foreclosed home is a home owned by the bank. These homes are usually the result of an unfortunate life event leading to the current homeowner not being able to make their mortgage payments.

Whenever someone has a mortgage contract, they have a lien on their property. If you stop making your mortgage payments, it allows the bank to seize control of the home. After the owner defaults their payments, the bank will possess the property and put it up for sale.

When you buy a foreclosed home, you are buying it from the bank, not a homeowner.

Real Estate Foreclosures
Real Estate Foreclosures

A foreclosed home is a home owned by the bank. These homes are usually the result of an unfortunate life event leading to the current homeowner not being able to make their mortgage payments.

Whenever someone has a mortgage contract, they have a lien on their property. If you stop making your mortgage payments, it allows the bank to seize control of the home. After the owner defaults their payments, the bank will possess the property and put it up for sale.

When you buy a foreclosed home, you are buying it from the bank, not a homeowner.

New Homes Foreclosures

The foreclosure process begins when a lender takes possession of the home. The next steps are:

  • Payment default and notice of default: Once the homeowner has missed numerous payments, payment default begins. After 90 days from the missed payment, the bank will send a notice. The time from this notice to foreclosure will vary based on the contract’s details and the lender and mortgage investor’s policies. In most cases, they will allow the homeowner time to create a new payment plan with the bank.
  • Notice of trustee’s sale: The lender will then record the pending sale with the county and publish a notice in the local paper. Many people find foreclosures this way, but using a realtor is more effective.
  • Trustee’s sale: The lender will then try to sell the home at a public auction.
  • Real estate-owned: Once the property fails to sell at public auction, the bank becomes the new owner and puts the property up for sale. Hence, the time when most people purchase a foreclosed home.
New Homes Foreclosures

The foreclosure process begins when a lender takes possession of the home. The next steps are:

  • Payment default and notice of default: Once the homeowner has missed numerous payments, payment default begins. After 90 days from the missed payment, the bank will send a notice. The time from this notice to foreclosure will vary based on the contract’s details and the lender and mortgage investor’s policies. In most cases, they will allow the homeowner time to create a new payment plan with the bank.
  • Notice of trustee’s sale: The lender will then record the pending sale with the county and publish a notice in the local paper. Many people find foreclosures this way, but using a realtor is more effective.
  • Trustee’s sale: The lender will then try to sell the home at a public auction.
  • Real estate-owned: Once the property fails to sell at public auction, the bank becomes the new owner and puts the property up for sale. Hence, the time when most people purchase a foreclosed home.
Foreclosure Homes

One of the most noticeable benefits of buying a foreclosure is a cheaper price. The reason for this is that lenders are looking to get rid of the home quickly to get their money back.

Another benefit is there are not as many title concerns. When you purchase a home from a homeowner you are less likely to get a clean title (legal right to a house). The homeowner may have unpaid real estate taxes on their title causing the deal to be cancelled. When you purchase a home from the bank there are fewer obstacles like title concerns that will hinder closing the deal.

Lastly, buying a foreclosure still allows you some loan options. Although the buying process may be slightly different you can still get a conventional loan or a government-backed loan.

Foreclosure Homes

One of the most noticeable benefits of buying a foreclosure is a cheaper price. The reason for this is that lenders are looking to get rid of the home quickly to get their money back.

Another benefit is there are not as many title concerns. When you purchase a home from a homeowner you are less likely to get a clean title (legal right to a house). The homeowner may have unpaid real estate taxes on their title causing the deal to be cancelled. When you purchase a home from the bank there are fewer obstacles like title concerns that will hinder closing the deal.

Lastly, buying a foreclosure still allows you some loan options. Although the buying process may be slightly different you can still get a conventional loan or a government-backed loan.

This process is riskier than buying from a homeowner and that is why having the right real estate agent to navigate these deals is necessary.

These properties can have more maintenance concerns because the homeowners have no incentive to repair damages when they are losing their property. At the end of the day, you will be left with the responsibility of fixing the problems.

The banks are looking to earn their money back quickly so they rarely agree to repair damages. Finding the right home at the right price is important and a lot of people spend a significant amount of cash to repair foreclosed homes after purchasing them.

Although a home may be labeled as “in foreclosure” it does not mean it is ready to purchase. There is a period of redemption where homeowners have the opportunity to catch up on their payments and retain their property. Or if the property is left unoccupied for a long time there may be squatters. Evicting squatters after purchasing a home can take years and a lot of money in legal fees.

Luxury Homes Foreclosures
Luxury Homes Foreclosures

This process is riskier than buying from a homeowner and that is why having the right real estate agent to navigate these deals is necessary.

These properties can have more maintenance concerns because the homeowners have no incentive to repair damages when they are losing their property. At the end of the day, you will be left with the responsibility of fixing the problems.

The banks are looking to earn their money back quickly so they rarely agree to repair damages. Finding the right home at the right price is important and a lot of people spend a significant amount of cash to repair foreclosed homes after purchasing them.

Although a home may be labeled as “in foreclosure” it does not mean it is ready to purchase. There is a period of redemption where homeowners have the opportunity to catch up on their payments and retain their property. Or if the property is left unoccupied for a long time there may be squatters. Evicting squatters after purchasing a home can take years and a lot of money in legal fees.

Realtor Foreclosures

Although buying a foreclosure may afford you a better deal, I can not stress enough the importance of finding the right real estate agent. The potential of buying a home with substantial damage or structural issues is greater if you work with someone who does not have the necessary experience or knowledge. I will guide you through the process and help you find the home of your dreams for the right price. Together we will navigate the search, get the proper appraisals and inspections, and lastly make an offer that fits your financial needs.

Let’s get started on this journey and find your diamond in the rough.

Realtor Foreclosures

Although buying a foreclosure may afford you a better deal, I can not stress enough the importance of finding the right real estate agent. The potential of buying a home with substantial damage or structural issues is greater if you work with someone who does not have the necessary experience or knowledge. I will guide you through the process and help you find the home of your dreams for the right price. Together we will navigate the search, get the proper appraisals and inspections, and lastly make an offer that fits your financial needs.

Let’s get started on this journey and find your diamond in the rough.

Rodeo Real Estate Agent
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BUYING A HOME?

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Realtor Hollywood Hills
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SELLING A HOME?

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Real Estate Agent Bel Air

Kenneth Grech

Real Estate Agent

Simi Valley | California

159 Parrot Lane,
Simi Valley, CA, 93065
DRE#01328727

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