Buying Foreclosed Properties
Unfortunately, when the economy gets bad, we tend to see more foreclosed properties. Buyers may see this as a great time to purchase a great property for below market value. And, this may be true. But, there are some things you should be aware of when thinking of purchasing a foreclosed (bank-owned) property: - Check to see if there are tax liens or other liens on the property which may become yours when you purchase a foreclosure. A title company can run a basic title search for you for a nominal fee.
- Remember you are buying this property “as is”. Get the property inspected before purchasing it, even if you have to pay for the inspection yourself.
- Usually you need proof of financial qualifications and a sizeable earnest money deposit just to bid on a foreclosure.
- Lenders are not in the real estate business and are fairly inflexible when it comes to paying for inspections and some closing costs. It is best to obtain legal advice before agreeing to purchase.
Avoiding Foreclosure with Short Sales
If you're having difficulty meeting your mortgage obligation, a short sale may be a good way to avoid foreclosure. When lenders agree to do a short sale in real estate, it means the lender is accepting less than the total amount due. Not all lenders will agree to a short sale and not all sellers or properties qualify for a short sale. For the sellers, it can mean still being responsible for the difference they owe and the amount they sell for. The lenders can place a deficiency judgment on the seller for the difference they still owe the bank. For a buyer, a short-sale process can take a long time. Remember, most lenders will sell the property “as is” and may not pay for closing costs, like title insurance. What can seem like a good buy can turn out to be a nightmare. Be sure to obtain legal advice if you are thinking of purchasing a short-sale property.
If you have questions about buying a foreclosed property, or if you may be facing foreclosure, call us at 505-865-7800 or toll-free at 888-865-7808, or complete the form below to send an email. |