THE DIGITAL MAGAZINE FOR ALL THINGS DENVER
Finding Foreclosures: What You Need to Know

Finding Foreclosures: What You Need to Know

     
July 25, 2014  |  Real Estate

foreclosure

 

Foreclosures come in several names in real estate websites. They can also be termed as pre-foreclosures, bank-owned, auctions, defaults, sheriff’s sales, REO, and ORE among others. While these terms mean different things, these terminologies have a common objective – to draw buyer traffic.

The tricky part? Whereas websites attract potential buyers to explore foreclosures, it’s common to see missing adequate information about what these homes really mean.

So, for those on the look-out for such kind of property, here’s a straightforward rundown to what foreclosures really are and where you can find such homes online that you might actually be able to purchase.

Foreclosure: The process whereby a lender can claim the property used by a borrower to secure a mortgage and sell the property to meet the obligations of the loan.

 

Auctioned Foreclosure: A blessing or a curse? 

Foreclosure auction

This is an all-cash purchase, which expectedly rules out a lot of buyers. Foreclosed homes at an auction pose a higher risk for buyers. The title or lienholder could have other outstanding associated liens that the buyer may not be aware of.

Lien: An encumbrance against a property for the repayment of a debt.  Examples include judgment, taxes, mortgages and deeds of trust.

Getting a home from an auction, as with any other auctioned items, requires detailed research. Check the title history to make sure that the home is free of any outstanding debts or payables that you as a buyer might automatically take on if you purchase. Moreover, auctioned homes often cannot be entered by the buyer as the current owners retain property rights until the sale takes place. Hence, you have to wait until after the closing transaction.

Cash for Keys or CFK are often paid to the owners or tenants to get them to move out immediately after the purchase.

If you have a lot of patience and time in your hands; are keen with details and like research work; and have the persuasion skills that you can bring to the table, then foreclosure auctions can work for you.

 

Pre-foreclosures: Do they really exist?

pre-foreclosures

“Pre-foreclosures” could be:

-          Homes that are NOT YET foreclosed but will actually go through foreclosure 1-3 years from now

-          Homes that are current with mortgage payments and are back on track

-          Homes that will be transferred or turned over to a family member

-          Homes that are going through a loan modification.

The truth is pre-foreclosures are a long shot for buyers. There is a slim chance that a pre-foreclosed property will actually be in the market – active and available – for potential new homeowners. Know that when you see the term “pre-foreclosure” that this kind of property is NOT for sale and most never will be foreclosure sales. Even those few homes that go through the foreclosure process will most often be only available for auction later than sooner. We’re talking about a few years, not months, and definitely not now.

Pre-foreclosures therefore, have no relevance for a home buyer who is actively looking to buy a foreclosure now (or anytime soon!).

So if you are in the market for a foreclosed home within a shorter timeframe, disregard pre-foreclosures and waste no more time looking into them. If however, you are more into the “window shopping” phase and wouldn’t be purchasing in the next few years, then these kinds of homes could be additions in weighing your options.

 

Bank-owned Home: The rose among the thorns

bank-owned foreclosure

Bank-owned homes are sometimes called Real Estate Owned (REO) or ORE. They have completed the entire foreclosure process and are now owned by a lender who wants to sell them. Consequently, these homes will be listed by a broker on the local MLS, local Realtor’s website and/or on other real estate websites like Realtor.com, Zillow, and Trulia.

A buyer can apply for a loan to finance the purchase of the property. Buying a bank-owned home is transparent as it can get. Buyer protections are available, such as seller disclosures, repairs, and contingencies.

Bank-owned homes are ready properties – qualified, sellable, and able. They are suitable for mortgage financing and are easily found in a foreclosure inventory.

If you are ready to buy and prefer a foreclosure, a bank-owned home is your best choice!

 

Related article: A Homebuyer’s Guide for Purchasing a Foreclosure

 

 

 

 

 

 

About the author

The Blake Team is a full-service Real Estate team based in Aurora, Colorado specializing in working with Buyers & Sellers, foreclosures/HUD, short sales, and luxury properties. A team with years of experience and an impressive success rate that made it the No.18 real estate brokerage in the nation, as well as the No.1 Keller Williams agent in Colorado led by CEO & Founder Lisa Blake. The Blake Team is your No. 1 choice for getting your dream home!