Foreclosure sales are happening everywhere and more often than you’d think. A number of people purchase homes and later find themselves unable to make the required payments because of troubles and hardships or are unwilling to pay when the value of the house drops below its purchase price. If you are in the market for a foreclosed home, there are a few things you should take note of.
The first thing you need to do is identify the homes that are or will be in foreclosure. Identifying all these properties will give you more time do your research and also give you a lot more options. You can find foreclosure properties in the local newspapers, the auctions for the city are usually published in the legal notices section. For instance, to find out more about foreclosures for sale in Destin, Florida, first check the local newspapers, tax records and real estate listings. In some areas you can get special issue publication with real estate and foreclosure listings. A real estate agent can also help, you can ask them to give you updates regarding any new foreclosures.
Types of Foreclosures
Foreclosures are processed in three stages: foreclosure auctions, bank owned properties (Real Estate Owned – REO), and pre-foreclosure (Short-Sales).
At the foreclosure auction, people show up at a predetermined meeting, usually at a public location, and make bids against each other for a property. Anyone can come to these auctions and representatives from financial institutions also show up to make sure that the bidding starts at an amount which helps them recover their costs. The highest bid wins. If the property fails to sell at an auction, it becomes real estate owned (REO). REO’s are the homes that go through an unsuccessful foreclosure auction and become bank owned properties.
Before the property is legally foreclosed and before the auction, buyers have an opportunity to make a deal with the owner or lender. This is called pre-foreclosure, and it is a period where investors stand to make the most money.
Find Out Everything Beforehand
Before bidding for a foreclosure, be sure to find the hidden costs involved in the process. You might want to research the title to see if there are any outstanding legal burdens or liens, outstanding property taxes or property encroachments. If you win an auction for a foreclosure property with any such baggage, you could be responsible for paying them off as well.
You may also get a surprise by banks that loaned earlier mortgages to the homeowner. This is the reason that it is extremely important to always have the title checked before attending the foreclosure auction. You do not want a property with strings attached and do not want to responsible for any back utilities either – yes that can happen too.