Tips for successful home purchases during 3 stages of foreclosure
Although foreclosed homes in Florida have prices comparable to regular home listings these days, real estate investors and home buyers still might find opportunities in these distressed properties. The foreclosure process has three stages, and each stage influences the buying process.
The first stage, known as preforeclosure, means that the homeowner still has possession of the property. A three-month period exists that gives the owner a chance to correct the default by selling the home. Buyers have difficulty identifying properties at this stage, but that means that competition will be low. For those who do locate preforeclosure homes, they can approach the owner and make an offer.
Once the second stage of foreclosure starts, then buyers learn about the properties from auction listings. Some auction companies arrange for open houses so that buyers can inspect homes, but this is not always the case. Auction buyers sometimes only review the outside of the home and the neighborhood before striving to get a good deal at auction. Hidden repair costs, however, could easily damage a buyer’s budget.
Homes revert to bank ownership at the third stage. Lenders will list these for sale through the MLS just like any other properties. These homes might have sat empty for long periods or been vandalized by tenants or thieves. Competition might be stiff for these properties, so potential buyers will need to make fast decisions.
Regardless of the stage of foreclosure, a buyer of residential real estate needs to check for liens against the title. An attorney may assist with this due diligence. A legal review may help protect a buyer from acquiring unforeseen debts linked to a property. An attorney might also answer questions about the purchase agreement and strive to ensure that the buyer is making an informed decision.