Foreclosure Properties Offer Bargains For Home Buyers
Some may think it is not right to benefit from another's misfortune, but the market for foreclosure properties has always been high. Even in tight credit markets, being able to buy a house for about two-thirds of its value is a strong attraction to real estate speculators as well as private individuals looking to buy their first or second home. Typically, foreclosure properties are sold at an auction operated by the county sheriff, and cannot be sold for less that two-thirds of its appraised value.
Many of the foreclosure properties are purchased by the company that foreclosed on a mortgage, which they will put on the open market hoping to recover the losses incurred from the borrower defaulting on the loan. The decision by the lender to buy the house at auction will depend on many factors including the home's condition, the final auction selling price as well as the house's location.
Since the lender is going to receive most of the proceeds of sale of the foreclosure properties towards the balance owed on the loan, they can actually make more money on the home if they can sell it later at its fair market value. While they can file a civil action to collect on any balance not covered by the auction, many former owners will file bankruptcy to get out from under the debt.
Due Diligence Needed To Verify Clear Title
There are occasions at auctions for foreclosure properties that bidders get excited about the prospect of buying a home below market value that common sense gives way to the need to win the auction. While most sales of these properties is conducted by the sheriff on behalf of a financial institution, there is no guarantee, at the time of the sale, that a thorough title search has been conducted.
It behooved the bidders to know that the title of the foreclosure properties has been researched prior to the sales and, if possible make the final sale contingent on the deed having no other debts attached. It has happened where years after a home auction another lender comes forward with authentic loan documents and the new owner is held responsible for the debt. While it is rare this can happen, the possibility does exist.
When in the market for foreclosure properties it is seldom a good idea to pay for a list of available real estate. By the time the list is compiled and sent out to interested buyers, many of the homes may be off the market. Besides, by law the sale of all foreclosure properties has to be advertised in local news outlets.
