| The process of buying properties that have been | | | | exterior to see if he notices any structural issues. |
| through the foreclosure process can occur in a couple | | | | The second way to buy a home that has been |
| of ways. First, the home can be sold at the | | | | through foreclosure is to buy an REO. An REO is a |
| foreclosure auction with the buyer being someone | | | | "Real Estate Owned" property that has been through |
| other than the original lender. Secondly, if there are no | | | | the foreclosure process, and has been purchased at |
| bidders at the auction, the lender will get the home | | | | the foreclosure auction by the lender. Often the lender |
| back as the high bidder for $100 over the amount of | | | | is forced to take a property to the auction to eliminate |
| the final judgment in the court action. | | | | or "extinguish" junior liens against the property, |
| If an individual purchases the property at auction he will | | | | otherwise the lender would have to assume the |
| be buying a property that may have major deficiencies | | | | responsibility off paying of these junior liens if the |
| with its title, structural issues, property taxes due, illegal | | | | homeowner gave the lender a "Deed in Lieu of |
| structures on the property, un-permitted work, or other | | | | Foreclosure" and walked away. |
| issues that can cause the bidder to be sorry later he | | | | The huge difference in the lender getting the REO and |
| bought the home. If you intend to bid on a foreclosure | | | | reselling it is that he must bring any delinquent property |
| property at auction, I suggest you try and see inside | | | | taxes current for the buyer. He must also provide "fee |
| the property before the sale. This is not to imply that | | | | simple" or "free-and-clear" title to the buyer. The |
| breaking and entering is the answer, but rather by | | | | process of clearing title deficiencies can sometimes be |
| contacting the homeowner and asking to buy the | | | | very expensive so buying REO's eliminates these |
| property from him, would be a better alternative. If he | | | | related issues. However, clear title does not mean the |
| has moved away, try getting permission from the | | | | property is free of deficiencies and that the buyer will |
| homeowner if you can track him down and go inside | | | | have to contend with them himself. These include |
| with some type of permission letter in your pocket in | | | | boundary disputes, structural damage, vandalism, |
| case the police are called. | | | | missing appliances or possibly even the premises being |
| You can also do your homework in the public records | | | | stripped of all metal, as well as other problems that are |
| or get an attorney to do it for you. In fact, an attorney | | | | excluded from the title policy. This is why the home |
| can do a complete and through title search in a matter | | | | inspection is so very important to determine what a |
| of minutes or days. He can also do an open permit | | | | buyer should expect to have as problems when he |
| and code violation search in about a week depending | | | | gets title to the property. |
| on your local city or county's code enforcement | | | | So buying an REO is generally much better than |
| department. Some cities will take time to do it if you | | | | buying a property at the foreclosure auction. There are |
| come in and others will make you pay and wait for 30 | | | | exceptions but the buyer must beware that hidden or |
| days or more. While this is being done, you should | | | | unanticipated issues can make the "cheap" purchase |
| have a home inspector do an inspection if he can get | | | | more expensive than a new home. So as always, do |
| inside the property, if not have him do a visual from the | | | | your homework and "buyer beware". |