If you’re contemplating between purchasing a short sale or a home in foreclosure, you’ll find the foreclosure option a more challenging one. A foreclosure occurs when the lender decides to execute their legal right to force the sale of a home when the owner defaults on their loan payments. In today’s upside down bank and mortgage industry, you’ll find a surge in the number of foreclosures hitting the market – creating new opportunities for homebuyers searching for a Anaheim real estate bargain. All communities, from the high end luxury Anaheim homes for sale down to the most inexpensive ones, are susceptible to foreclosure.
A foreclosure proceeding happens over a specified period of time – the homeowner is first given an opportunity to resolve the delinquent loan. Once the bank has decided to assert their foreclosure rights, a homebuyer can take advantage of purchasing the home during three phases: 1) Pre-foreclosure, 2) At the public sale or auction, and 3) Directly from the bank after the foreclosure (called real-estate-owned or REO).
The primary advantage in purchasing a foreclosure is the low purchase price no mater which stage of the process you decide to buy at. Here are some main disadvantages of buying a property in foreclosure:
1) Minimum Buyer Protection – Unlike a normal homebuying transaction, a foreclosure process will force you to sacrifice some homebuying protection. For example, you may not get the opportunity to inspect a home before you buy it and have to forgo any protection from title insurance.
2) Waiting For The Owner To Cure The Default – Many states have laws designed to insure lenders can’t swindle a home away from late-paying homeowners on short notice. If you’re a buyer, that mans you’ll have to deal with tons of deadlines, unexpected delays, court rules, and uncertainty – especially if your state gives a former homeowner the right to “redeem” or buy the property back within a specified time after it was sold in foreclosure (can range from ten days up to a year). If this should happen, you’ll receive a refund of all your money. The question you need to answer is do you really want to wait in limbo, not knowing if you’ll get the home?
3) Real Estate Investor Competition – The real estate market abounds with plenty of investors searching for great deals on a a home. If you decide to pursue a foreclosure be prepared to fight other investors to buy the home.
4) Unknown Risks – Homeowners in foreclosure typically suffer through financial hardship for a while. They’ve probably cut back on maintenance, fallen behind on taxes, or put the home up as collateral for other debts.
If you still decide to purchase a home in foreclosure, it’s important to have an experienced Realtor assist you through the process. Make sure the agent specializes in them. Only certain Realtors will specifically handle a foreclosure. If you decide to have a regular agent working for you, make sure to delineate each agent’s role, so there’s no confusion. You may also consider hiring a real estate attorney to help you steer through the maze of steps.
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