re you Purchasing a Foreclosure?
The purchase of a foreclosure property differs somewhat from the purchase of a regular property.
If you are looking to purchase a property in foreclosure, it does require more due diligence on your part.
A foreclosure occurs when a homeowner fails to pay the mortgage. More specifically, it’s a legal process by which the owner forfeits all rights to the property. If the owner can’t pay off the outstanding debt or sell the property via short sale, the property then goes to a foreclosure auction.
Once a property is subject to foreclosure proceedings, anyone may apply to the court for Conduct of Sale. Often the lender makes the application which allows the court to instruct that the property be listed for sale.
Was the borrower’s mortgage was insured? If, after a certain period of time, the property remains unsold, the insurer will take title to the property and pay the mortgage lender the amount of its mortgage.
In a normal non-foreclosure listing, sellers are asked to fill out a Property Disclosure Statement by answering several questions about the property for sale. In a foreclosure, there will be no PDS and the Schedule A often contains a clause which reads “The purchasers expressly agree that neither the seller nor its agents or representatives have any liability, responsibility, duty or obligation to disclose to the purchasers any information or knowledge that they have with respect to the condition of the lands and premises or any latent or patent defects thereto.” A professional home inspection would be advantageous in this situation. This may cost you up to $500. but would be well worth it in the end.
An accepted offer is received by the listing Realtor and brought to the court for consideration. Other potential buyers can attend court for the hearing and be given an opportunity to present a bid. A judge can only approve subject free offers, so your financing must be approved in advance and ready to go.
Buying a home can be a stressful experience for home buyers. Foreclosed property sales are an increased risk and uncertainty to the buyer. Longer wait times for responses to offers, higher deposits, uncertainty in dates such as completion and possession, and longer waits for possession. At the end of the day, the sale price may not be the deal that many buyers are expecting.