So you want to buy a property in foreclosure?
I received a few inquiries in the last 2 weeks from potential buyers of homes in foreclosure. All callers had one thing in common, they were expecting to save a truckload (or a car-load at least) of money in the transaction. Yes, the economy is bad, yes, there are more homes in foreclosure than previous years; but no, lenders can not sell a home for the amount of outstanding mortgage unless market value of the house is same or lower (yes, that happens in this market) than the balance of outstanding mortgage.
When a homeowner fails to make the mortgage payments on time, the lender must follow a certain procedure, and make efforts to collect the debt. Going to court and getting a court order to force the sale of mortgagor’s home is final step in the foreclosure process. In most cases all offers by the buyers are presented to the court. The judge must be convinced that the offer is fair to all parties including the borrower in default. Only then a judge will approve the sale.
Another important thing to keep in mind when buying a property in foreclosure is that most properties are sold “as is, where is”. No warranties of any kind. Your insurance company will also this as a high risk property.
Now I am not saying you can’t save significant amount of money when buying a home in foreclosure. But I do suggest that you do your homework and seek professional help before investing your hard earned $$$..