REAL ESTATE TIPS: Foreclosure – Short Sale – Buying at Auction – Deal or no Deal? | Oceana Estates

Due to the real estate bubble of 2008 there was a 14% increase in foreclosures within just two years. Though
foreclosures are down by 26% since 2012 they still continue to take place across
the nation. In fact, according to real estate experts almost 1.4 million
Americans foreclose on their homes or were served default notices on their mortgages in 2013. And when those houses pop up on the market they tempt buyers
with potentially lower prices. I’m here to help you understand how the
foreclosures actually work. What’s the difference between buying a foreclosed
home purchasing one at auction and a short sale. And does the lower price tag
justify the value for the money? What is a foreclosure? When a homeowner takes out
a mortgage from a lender they’re agreeing to pay back both the principal
which is the actual loan amount and any interest that accrues over the time of
the loan. If they miss multiple payments it shows the bank that they may not be
able to keep up with paying for the loan. That’s when a foreclosure the process of
the bank repossessing the house will begin. The initial step is when the bank
will issue a document called the notice of default. This marks the beginning of
that reinstatement period during which the homeowner must pay their bills or
face foreclosure. What is a short sale? During the reinstatement period
homeowners have options including negotiated with their bank and working
out a short sale. This could be a convenient option for anyone who can’t
make their mortgage payments but finding a buyer could be tricky. A short sale is
when a mortgage company agrees to accept the loss which is less money than the
loan balance. This means that the potential buyer could pay well below
market value. Convincing a mortgage company to settle for less than they’re owned can be a slow and tedious process. Prospective buyers who would potentially
purchase a short sale property should also be aware that they’re likely to
receive the property as is meaning that the buyer may face additional cost when
it comes down to the structure of the home or any home improvements. What
causes a property to go up for auction? Typically if the owner doesn’t catch up
on their loan payments within roughly 3 months of being served a notice of
fault they’ll receive a notice of sale. This means that the house is officially
in foreclosure and an auction date has been set. Eyeing a foreclosed home at auction can be risky. The minimum bid is set by
foreclosing lender which means that it includes the outstanding loan balance interest and additional auction fees. In order to show your series you’ll also likely be expected to have at least 10% of the purchase price at hand. To make
matters even harder for the buyer bidders are not allowed to inspect the
property effectively you are purchasing the property blindly and without knowing
what type of condition or shape it is in. And even after all that the lender may
still decline your offer because they want to get back as much money as
possible for the value of the home. Hence, it is unlikely from the lender to
accept the initial offer when a property doesn’t sell at auction the lender
becomes the owner making it a “bank-owned” or “real estate-owned” property. When
a property becomes foreclosed while the price tag mailer buyers in it is almost
guaranteed that the purchase process will be a long and complicated one. While
foreclosed properties pop up every once in a while any potential buyer is highly
advice to work closely with their agents and conduct as much research as possible prior to making an offer. This could spell the difference between a good deal
or a bad deal. Want more useful information about how to obtain a
mortgage or what type of home to buy use the link below to download our
presentation and subscribe to our channel.

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