B U Y I N G A F O R E C L O S U R E P R O P E R T Y
Purchasing Foreclosure Properties - Over the past year, nearly 50% of the recorded real sales have been attributed to distressed property sales. Albeit the premise of purchasing a distressed property at a fraction of the value would be attractive to any buyer, purchasing properties outside of ‘normal-course’ can has other associated risk. An educated buyer should weigh out the advantages and disadvantages and to determine if the overall benefits outweigh potential pitfalls.
Some risks may include:
There are four general categories of distressed properties:
Short Sale – Property is still owned by the home owner, and is actively for sale “short” of the outstanding loans or mortgages. Many times these properties are listed for far less than what the bank or lien holder will accept to sell the property. Many short sales revert back to the bank for bank owned sale or bank auction.
Foreclosure – The legal proceedings where the lien holder(s)/ mortgagee (usually a bank) orders a termination of the lien holders right of redemption, and rights of use and occupancy of the property. This can be a timely process as it involved the courts.
Bank Auction – Proceedings where the lien holder markets a reclaimed property for open bidding to the highest bidder. Often times the lien holder set a reserve which the property will not be sold below that amount. Properties that do not change hands under these proceedings revert back to the lien holders.
Bank Owned (REO) – Property that is in the ownership possession of the lien holder. Generally these properties are vacant and the banks are now more motivated to sell the properties to get them off of their books.
Beware of opportunistic foreclosure companies or firms that:
Why utilize Sotheby's Luxury & Coastal Group Agent's for distressed property purchases?
Lucrative opportunities present themselves, and it is our strong recommendation that you seek our expertise before you attempting to purchase a distressed property. On most short sale purchase opportunities all or most of the buyer’s agent sales commissions are generally covered by the seller or the bank.