Real Estate
Foreclosure Intricacies-shortsaleonlyus.com
Far too many people are falling victim to property foreclosures. This is a as a result of the devastating credit crunch that has dealt a domino effect to all sectors of the economy. The single biggest casualty is the widespread loss of employment and redundancies. There’s excessive erosion of opportunity, business or otherwise.
Reduced business means reduced or no employment. No employment means no money in the pocket to meet financial obligations and, or, service financial commitments such as servicing of loans on acquired property, hence the widespread incidences of real estate foreclosures.
A foreclosure is the legal re-possession of property taken on a loan basis by a borrower. The buyer being unable to repay the loan, the lender proceeds to re-possess the property, auction or re-sell it as foreclosed property to a third party.
The Initial Process
On default of loan repayment, usually for three consecutive months, the lender issues a default notice against the property owner. This is meant to jolt the property owner to take quick relevant action. Should there be no positive response, the lender who is the de facto property owner, may proceed to foreclose the said property and sell it off on trustee sale basis.
Buying Foreclosed
Property
Foreclosed property is most attractive to property speculators as it more often than not comes cheaper than regular property put up for sale right after development.
The bank’s main concern is to recover its pending money and not necessarily acquire profit on sale of the property. So it does not have to dispose the property at its market value. At the auction, the highest bidder gets the property even if at a depressed price.
The key word in buying foreclosed property is caution and attention to detail. As much specific information on the property must be gained before committing to buy as there is not much recourse once the money has changed hands.
Matters are not helped by the fact that foreclosed property is not usually available for inspection prior to purchase. Neither are there established or official schemes that specifically support foreclosure acquisitions in the market. Therefore to avoid possible frustration or regret, all due care and concern should be exercised prior to purchase.
Foreclosure Types
Foreclosures are of two main types: judicial and non-judicial. The former refers to a situation where the trustee, lien holder or mortgagee requests sale of property under court supervision so as to service the outstanding debt balance. The latter occurs when the property owner disposes the property under power of sale-in-a-trust-deed, for the defaulted property.
Like for any other potential object of investment, finding foreclosed property for purchase should be an exercise in diligence. Generally with real estate purchase, a lot of physical movement in search of the property (spotting), examination and assessment of the same has to be done.
Fortunately, things are made easier by the fact that most foreclosed property notices are put up in newspaper adverts in the legal notice pages of local newspapers, for public attention.
The US State Department of Housing and Urban Development has
a webpage where they put up advertisements for foreclosed real property. The
URL is http://www.hud.gov.