Online Searches For Foreclosures…Good or Bad?

There are basically three types of “foreclosures” available to purchase. When I say foreclosures
I should clarify the ways in which a property is available as a home owner doesn’t make a payment on their property.

Pre-Foreclosures – home owner doesn’t make payments and prior to a foreclosure an individuals has an opportunity to buy the property.

Foreclosure Auctions – if a home owner doesn’t make payments and nobody buys the property PRIOR to the public auction, the property will be put up for auction on the steps of your local county courthouse.

Bank Owned (REO) – if a property does not sell at a foreclosure auction, the bank essentially buys the property back and then they list it with a REALTOR for them to sell.

Sam DeBord wrote an article for Realtor.com where he did a great job explaining the pros and cons of buying these properties … one thing to keep in mind, it will be to your advantage to have an investor friendly REALTOR on your side to assist you in finding foreclosed properties and assisting you in doing your due diligence.

Below are some highlights from Sam’s article;

The landscape of “foreclosures” in online real estate search is unnecessarily confusing. Real estate websites use a vast array of terms to draw potential buyers in to their claws: Foreclosures, pre-foreclosures, auctions, bank-owned, REO, ORE, defaults, and sheriff’s sales, just to name a few. While these terms mean many different things, they’re often used to draw buyer traffic, but not necessarily educate the consumer about their meaning.

Bank Owned Homes
The vast majority of home buyers searching for a foreclosure are actually looking for a bank-owned home. These properties are sometimes called REO (Real Estate Owned) or ORE, and they are homes that have already gone through the entire foreclosure process. They are now owned by a lender, and that lender wants to sell them.

Foreclosure Auctions
homes sold at auction can often not be entered by the buyer until after the closing the transaction. Since the current owners retain property rights until the sale takes place, the tenants can not only forbid buyer tours, but also trash the home before leaving. Auction buyers often have to pay the former owners or tenants a “cash for keys” bribe to get them to move out of the home peacefully after the sale has concluded.

Pre-Foreclosures
Pre-foreclosures are simply homes that, at some point, had owners who missed mortgage payments and received some sort of default letter from their lenders. They very well may be:
• Homes that are now back on track, current with mortgage payments
•Properties with a loan modification in the works
•Houses that will be transferred to a family member
•Homes that will actually go through foreclosure–1 to 3 years from now The reality of pre-foreclosures is that there are only a small fraction of them that will ever be available to the public who are viewing them online. These homes are not “for sale”, and most never will be foreclosure sales. Even the few that do go through the foreclosure process will often not be made available at auction until a couple of years down the road. This is in no way useful to a home buyer who is trying to purchase a foreclosure now.

http://www.realtor.com/blogs/2013/05/21/finding-foreclosures-online-the-...