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Foreclosure is a term for the entire process whereby a homeowner
looses their home. Throughout the process, there are many different
stages of when a home can be sold and purchased by new buyers.

Stages of "Foreclosed" Homes to Purchase

Short Sale "Pre-Foreclosure":

A short sale is a transaction in which the lender, or lenders, agree to
accept less than the mortgage amount owed by the current homeowner.
In some cases, the difference is forgiven by the lender, and in others the
homeowner must make arrangements with the lender to settle the
remainder of the debt.

  • Homeowner still owns and controls the property and more than
    likely is being "foreclosed" or cannot afford the home

  • Homeowner is selling the property and will agree to a selling price;
    however, their mortgage holder must approve the sale.

  • Short Sales are usually priced the same as other "distressed"
    home sales including bank owned foreclosures.

  • The buyer has the right to conduct a home inspection, have their
    attorney review the contract and have a contingency to obtain a
    mortgage.

  • Unlike Bank Owned Foreclosures, where the property has been
    vacant for many months if not years; with a Short Sale the owner
    may still be living in the home and taking care of the property.

  • The Short Sale process can take a long time, in some cases, up to
    6 months from the time you submit an offer to the time you hear a
    first response back from the sellers mortgage holder.

  • There is no doubt you can get a good deal with a Short Sale, but
    you need to have some time and a lot of patients.


Foreclosure Auction "Sheriff Sale":

The foreclosure auction is where a buyer goes to either the County
courthouse or a third party location and purchase a property through a
live bidding process.

    In most cases:

  • A buyer needs to have 25% at the time of the auction and be able
    to produce the remaining balance within 24 to 48 hours. There is
    no way to obtain a mortgage within this time frame.

  • The buyer does not have a right to inspect the property or conduct
    a home inspection, attorney review or obtain a mortgage.


Bank Owned / Real Estate Owned "REO":

The home owner's mortgage holder obtains the property back at the
foreclosure auction and then lists the home for sale with a real estate
agent.

  • Homes are listed to sell fast, usually at or above list price.

  • The buyer has the right to conduct a home inspection, have their
    attorney review the contract and have a contingency to obtain a
    mortgage.

  • Special FHA re-hab mortgages are available to fix up the properties
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