Foreclosures


How to Buy a Foreclosed Home

Thinking of investing in a foreclosed home? If you’ve never done so before or if you’re new to home-buying, then it’s best if you focus on those properties that have already gone through the process and whose ownership has already reverted to the bank/lender. These are also referred to as bank owned or real estate owned (REO) homes and the process of buying one of these resembles that of a traditional home purchase in general, with a few notable differences and a bit more paperwork and negotiating. Here are some things to keep in mind when buying a foreclosed home:

  • Determine your budget and secure financing as early in the process as possible. When you know how much you can afford or how much you’re willing to spend, you can search for properties more efficiently. If you’re getting financing, then you’ll want to get preapproved – having your financing in place allows you to make an offer quickly once you find a home you like. This is especially crucial in a multiple-bid scenario, which has been known to happen, particularly if the property is well-located and attractively priced.
  • Work with an agent who understands the foreclosure market. Nothing beats experience and you can only benefit from the expertise of an agent who knows the market and is familiar with the foreclosure-buying process. Experienced agents will also have well-honed negotiation skills and are doubtless conversant with the various requirements of each bank/lender.
  • Get an inspection. Found a property you like? Know that REOs are typically sold as-is. Unlike a typical home sale where the seller is obligated to disclose what repairs need to be done and will often offer to get some completed, lenders are usually not up-to-date on the state of the property and don’t provide disclosures. You can, however, have the property inspected yourself (it’s a good idea to be present during the inspection). This way you’ll get a clear picture of what needs to be done and you can estimate how much potential repairs may cost and factor that in when calculating the final price.
  • Be patient. Banks and lenders aren’t known for being prompt responders. A certain amount of bureaucratic red tape is to be expected and it’s best if you know this going in. Your timetable needs to be flexible and you will definitely have to practice patience so you won’t get unnecessarily stressed.

For more information on investing in foreclosed properties, get in touch with us at California Listing Services anytime.


How to Avoid Foreclosure

If you owe more on your home than what it’s worth and you’re finding it hard to keep up with your mortgage payments, it’s normal to feel overwhelmed. You do have options, however, and while things may seem bleak now, the best thing to do is to be proactive and to find solutions as early as possible. Here are some of the things you can do, depending on your particular situation:

  • If you’re still managing to keep up with payments, but you think you might go into default soon, don’t wait. Get all your financial information ready and get in touch with your lender as soon as possible. If you wait until after you’ve missed payments and the Notice of Default has been filed, you’ll have fewer options to work with. Once you’ve apprised your lender of your situation, they can:

    – Agree to work out a repayment plan with you.
    – Offer forbearance – wherein your monthly payments are suspended or reduced for a specified period of time.
    – Have the original terms of your loan modified.

    You can also look at refinancing or taking out a new loan. If you’re having trouble with refinancing, see if you can qualify for the Home Affordable Refinance Program (HARP).

  • If the Notice of Default has already been filed, you can still list your property for sale. Let your lender know that you plan to do so as early as possible, this way you can ask them to delay the public foreclosure auction and provide you with more time to come up with a good marketing plan for your property.
  • If you’re underwater on your mortgage, then you should consider a short sale. While a short sale will ding your credit somewhat, it’s a much better alternative to foreclosure. Your lender will have to agree to this, since they’re the ones who are going to get “shorted.” It’s best to work with an agent who’s had experience with short sales since this process can get gnarly and he or she will have to get a lot of paperwork and following up done.
  • If you can’t stay in your home and you can’t qualify for a short sale, then you can ask your lender if they’ll agree to a Deed-in-Lieu of Foreclosure. This is when you voluntarily transfer ownership to your lender and they cancel your mortgage in turn.
  • If you’re a service member or the dependent of one, then you may have other options if your mortgage is owned by Freddie Mac or if you have a VA loan.

Are you facing foreclosure? We can help find the best solution for you! Contact Damian Lyon and our team at California Listing Services for advice and guidance today.