PropportunitiesNOW.com Blog

I’m back. Took a break from bloggin’. Been out at the doors in the Palisades and helping my buyer’s strategize. Since short sales and REO’s are a chunk of the Pedro market…I thought I’d pass on some research as I find it. I find that when new buyers say “I want to buy a foreclosure….” they aren’t clear on what that means. Do you think a Short Sale means it’s a sale done in a shorter amount of time? What do you think REO stands for?

1st answer, Short Sales are long, in terms of time. The bank is involved because the amount of money owed on the property is less than or short of the market value. A seller can’t sell with enough in the house to pay off his debt and closing costs. In lieu of the below process, a seller engages with bank and tries to sell at a lesser amount with the bank’s agreement. It takes time! 3, 6, 9 months.

2nd answer, REO is an ancronym for Real Estate Owned, in other words, Bank Owned. I’d say REAL EQUITY OPPORTUNITY. I smile. And you get what you pay for. In the REO case you don’t get something important when you pay. In a traditional real estate sale the seller is obligated to DISCLOSE THEIR FANNY OFF. They have forms to talk about everything from the skunk that visits the basement regularly to whether someone died or the tub overflowed 3 years ago. You get absolutely no disclosures re: experiences the past owner had with the property. It’s a blind date gone straight to marriage. Investigate the heck out of that property when you preview it.

RealtyTrac summarized the Fore-closure process nicely. What’s next is from them.
Get a grasp of the terms and process. Then call me if you’re interested in buying one today. 310.200.4614 Renee Ferjo

Overview

Foreclosure is a process that allows a lender to recover the amount owed on a defaulted loan by selling or taking ownership (repossession) of the property securing the loan. The foreclosure process begins when a borrower/owner defaults on loan payments and the lender files a public default notice. The foreclosure process can end one of four ways:

1. The borrower/owner pays off the default amount to reinstate the loan during a grace period known as pre-foreclosure.
2. The borrower/owner sells the property to a third party during pre-foreclosure, allowing the borrower/owner to pay off the loan and avoid having a foreclosure on his or her credit history.
3. A third party buys the property at a public auction at the end of the pre-foreclosure period.
4. The lender takes ownership of the property, usually with the intent to re-sell. The lender can take ownership through an agreement with the borrower/owner during pre-foreclosure or by buying back the property at the public auction.

Foreclosure Buying Opportunities
The foreclosure process offers three bargain-buying opportunities, represented by six different property statuses on RealtyTrac.

1. Buying during pre-foreclosure (NOD, LIS)
2. Buying at public auction (NTS, NFS)
3. Buying bank-owned properties (REO, GOV)

California Overview

Judicial Non-Judicial Process Period Sale Publication Redemption Period Sale/NTS
Yes Yes 117 Days 21 Days 365* Days Trustee

Pre-foreclosure Period

Court foreclosures only occur if a lender desires a deficiency judgment. This process gives a borrower up to one year to redeem the property after the foreclosure sale. It is recommended that the borrower find a way to resolve it, or get some foreclosure assistance.

In almost all cases, foreclosures are handled out of court. The process begins when a lender files a notice of default with the county recorder identifying the default amount and the date the borrower must pay off the default. The notice is mailed to the borrower and other affected parties.

Up to five business days before the trustee sale, the borrower may pay off the default plus any applicable costs of foreclosure and stop foreclosure. Three months after the notice of default is filed, the lender can schedule a trustee’s sale of the property.

Notice Of Sale / Auction

At least 20 days before the trustee’s sale, the notice of sale must be posted on the property and in one local public location. The notice is also published once a week for three weeks in a local newspaper, starting at least 20 days before the sale date. The notice is mailed to the borrower at least 20 days before the sale and to anyone who requests the notice. The notice must contain the date, time, and location of the sale, the property address, and the trustee’s contact information. In addition, the notice of sale must be recorded with the county recorder at least 14 days before the sale.

The trustee’s sale is a public auction and the property is sold to the winning bidder. The trustee may require bidders to pay the full bid amount in cash or cashier’s check. Anyone may bid at the sale, including the lender and any junior lien holders. A trustee’s sale may be postponed by announcement at the sale. If a sale is postponed more than three times, a new notice of sale must be issued.

After the sale is complete, the trustee transfers ownership to the winning bidder. The borrower does not have the right to redeem the property after the sale.

* Judicial Foreclosures Only