How to Buy a San Clemente Foreclosure
Posted on August 14, 2008 by Matt.
In this article "How to Buy a Foreclosed Home" many great points are brought to light to educate buyers on the different stages of foreclosure and their implications. If you are looking to buy and find a good deal, it might be a foreclosure as 40% of California homes sold in the second quarter were foreclosures. Below, you will find a description of the different stages of foreclosures and their implications to you as a buyer in order for you to make a more informed decision:
1. Pre-foreclosure
A pre-foreclosure occurs when the borrower has fallen behind on payments but their property has not been auctioned off. Lenders will file deliquency notices with county courthouses when a borrower has fallen behind. All it takes is a little research to find out what homes might be coming on the market. This is also the time when a short-sale can occur, which means the buyer pays less for the house than owed with the lender agreeing to the price and foregiving the debt. More recently, lenders have been more open to the short-sale as going through the entire foreclosure process can cost them thousands.
2. Sheriff's Sale
A sheriff's sale is the next stage of foreclosure when homes are auctioned off at the county courthouse. While this could be the biggest bargain, there are greater risks. As a bidder, you cannot inspect the property and you have no idea what kind of liens are on the property, such as unpaid property tax and other fees. Also, as a buyer you need to come up with 10-20% down immediately. Lastly, the purchase could fall through if the current owner can come up with the amount you bid. To conclude, a sheriff's sale has the greatest risk-reward relationship.
3. Post-Foreclsure
A post-foreclosure occurs after a lender takes back a house and the property goes back on the market as an REO (real estate owned) property. REOs are like a typical sale with a listing broker. Deals may not be as good as a sheriff's sale, however, there is a lot less risk. Typically REOs sell for 95% of listing price, which is already marked down 10-15% below current market levels. If you shop wisely and with patience, you could get a 15-20% discount off market price.
For more information on San Clemente real estate foreclosures, please explore our website or contact us.
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