What does it take to buy any of these types of properties? You better to be condition and prepare, the BARGAIN is here but with all the confusion crea...
What does it take to buy any of these types of properties? You better to be condition and prepare, the BARGAIN is here but with all the confusion created by the media.
2009 will be the year for YOU to grab a piece of this bargain and you will be a PRO after reading all these valuable information. I start holding seminar in 2008 due to the large confusion with all these terms use in today's market, short sale, REO real estate owned, bank owned property, auction home and foreclosure home.
The first step when home owner miss his payment on his home, would be a phone call from his lender and a mail notification. At this step, the home owner will have to explain the reason why he was unable to make his payment, lost of job, sickness, rate went up, and loan has readjusted.
At this stage you might be able to have a loan modification if you still have an income to cover your mortgage. The problem that I have seen is most of these peoples has a pick payment plan with a negative amortization. So even now, if they want to get a loan modification that will cover interest only, mortgage payment will be much higher than before.
So if you cannot qualify for a loan modification, your next option would be to "Short Sale" your home, you will need to get your lender approval. Your home will be sold for less that the loan amount that you owned, and many times you might have 2 lenders and you will need to get both of them to approve the sale.
For the short sale, you will need to hire a Realtor, just like a normal sale. What I suggest is to start at market price and reduce price until you get an offer. To trigger a short sale you will need to bring an offer in and remember, YOU WILL NOT BE THE DECISION MAKER, reduce the price and bring an offer in.
If you don't qualify for a short sale or are unable to sell through a short sale, your house and your loan will move from pre-foreclosure to foreclosure. A NOD notice of default will be published and mail to you. While you are in pre-foreclosure, you can reinstate your loan by paying late fees and what it takes to get back into your loan. Once you are in foreclosure and received your NOD, you will obligate to pay off these loans.
What next? You received you NOD and will be publish for 90 days, follow this NOD would be foreclosure sales that will be publish once a week and for 3 weeks.
Foreclosures sale in our area occurred at the court house, and the term is cash or cashier check only. You have to be very careful buying these properties, what ever other liens that have been recorded will come with the sale.
I read few months ago about somebody that bought a real bargain home value of $350,000 for only $200,000. Then later to find out that this property has 2 loan of $600,000 on it.
Most of the time, lenders are ending up by not selling the property and getting it back to them.
Then at this stage, the Deed of Trust that we use in California and some other states will go back to the lenders, and it is what we call a bank owned or real owned, TITLE OF THE HOUSE HAS CHANGE FORM PREVIOUS HOME OWNER TO THE LENDER.
So now, you have a clear understanding between REO and short sale. For us real estate agent, it is a big difference. When I work on REO purchase for my client, we are working with the lender and the real agent that represent them, my commission is guaranteed, we have a closing date.
With a typical short sale, most of the time they cut our commission and even if the owner still on the title, we need to work their lender, be sure that they have a complete package from their client. It is a very slow process, most of the time they are coming for higher price, and we go back and forth...and then two to three months later we still negotiating.
At this stage buyer is getting very upset. You cannot lock your rate nor do anything with your loam and what you had or were qualify 3 months ago is not here anymore.
So do you get the pictures? I just stay away from this short sale.
You hear all the time AUCTION home, what are they?
Auction is a different way to sell these foreclosures, and foreclosure means that lenders have taken title of the house, they own the property.
For them, there are couple ways to sell them, through a real estate agent or Auction. Auction work just like a regular sale, you will have 30 days to close, a 3% to 5 % deposit up front. Myself, I attend at many auctions and I don't like them because it is all about emotion. You can buy the same home that are listed through real estate office, you want to be sure that the price is right and you will use sense with your offering price.
If the bid is too low in the auction, lenders or investors can turn down the offer and put the house back in MLS and I have seen this happen more and more. Lenders try the MLS and higher price, and then suddenly need the money put the property through the auction sale, offer is too low and will go back to MLS.
So let's review the process, we have short sale, owner still on the title of the house, need lender approval with the sale, take more time to sell.
Then we have foreclosure sale at the court house where the lender is getting the house back and turn into REO, if buying REO also called Bank Owned check any other recorded lien. Term is all cash or cashier check only.
Selling these REO would be through real estate agent MLS or through auction.
