Buying Foreclosure Homes

“Foreclosure” happens to a homeowner when they have defaulted on the loan or loans on their real estate. The first phase of foreclosure happens after several payments are missed… after such time a “Notice of Default” is served to the Owner from the Lender. Once the Notice of Default is delivered to the Owner, it becomes public record, and there is a defined period of time that the Owner has to cure the loan including full payment of all past due payments, late charges, attorney’s fees, court filing, service, and trustee fees.

Very often, I receive inquiries for Buyers looking to take advantage of potential discounts that are perceived to be available on foreclosure properties. There are many websites that offer subscriptions fees for lists of foreclosure properties, with the lure that these properties can be purchased for pennies on the dollar. First of all, there is no need to pay money for these lists. They can be obtained for free from Title Companies, or at the County courthouse.

What you need to know is that statistically less than 2% of all properties that go into the foreclosure process with a Notice of Default actually get foreclosed on. Taking it a step further, nearly all of the 2% of properties that actually go to foreclosure sale are highly leveraged (the loan amount is close to, or even above the actual market value of the home). The bottom line is that it is very, VERY rare to see a property go to foreclosure sale where there is much, if any equity in the home. Combine that reality with the fact that most foreclosure homes are in very poor condition by the time that the occupant vacates the property. Even if you found that rare deal, you need to be prepared for the vast competition at the foreclosure sale (also known as the Sheriff’s Sale). To purchase a foreclosure property certified funds are required. Therefore, conventional financing is not an option.

Most of the time the Lender winds up with the foreclosure property at the Sheriff’s Sale for the amount of their loan on the property, plus costs. The Lender then processes the home, and will often complete necessary repairs on the home to make the property marketable. This can often take several months. As you might imagine, all improvement costs are typically added to the Lender’s bottom line. In the end, foreclosure properties may be priced higher than market value when they finally hit the market. The result is that foreclosure properties are sometimes not the great deal that the perception leads you to believe they are.

I know a couple of foreclosure hunters in the Portland area who spend a great deal of time and money soliciting those Notice of Default lists to try and secure the property before it gets foreclosed on. By a lot of time, I’m talking FULL time. When I say a lot of money, we are talking thousands of dollars a month in mailings alone. That being said, I find that they will secure 2 or 3 properties a year, after all of their work hunting and soliciting hundreds of Owners in default. I know this because they have come to me to resell the properties. And guess what… by the time these investors are ready to flip the property… their asking price is right back at market value.

My advice is that there are better deals, that are easier to be had, on the market RIGHT NOW, that are likely to be in better condition, and that can be purchased with far less hassle than foreclosure properties. I am happy to forward you the Notice of Defajult lists for free if you desire. However, we should meet first to talk more about what is required to compete in the foreclosure market.

Best regards,

Mark Vandervest, Broker
RE/MAX Equity Group, Inc.
www.TheOregonBroker.com

Now… more than ever…
~ There is simply no substitute for experience. ~
“People Before Profit… Reputation Before Revenue!”
Mark Vandervest

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