Purchasing of properties that have undergone the foreclosure process can occur in two different ways. First, the properties can be sold at the foreclosure auction with the buyer being someone other than the original lender. Other reason was, if there are no bidders at the auction, the lender will get the home back as the high bidder for $100 over the amount of the final judgment in the court action.
If one purchases he property in an auction, the buyer could bought the property with lapses such as deficiency in the property title, structure issues , tax dues or even other issues that a buyer may regret after buying the property. If one tries to buy property in an auction, be sure to check the property physically before deciding to purchase it.
This is does not mean that you are already breaking in to the property, it can be done by contacting the property owner, and asked permission from the homeowner .But be very vigilant like bringing in permission letter in case police attention is called while checking on the property.
One may also do their homework in the public records or get an attorney to do it for you. In fact, an attorney can do a complete and through title search in a matter of minutes or days. He may also do an open permit and code violation search in about a week depending on the local city or county’s code enforcement department.
Other cities spend time to do it if you come in and others will make you pay and wait for 30 days or more. While this is being done, you should have a home inspector to do the inspection if he can get inside the property, but if he is not allowed to do that then , have him do a visual from the exterior to see if he notices any structural issues.
Another way to purchase a home that has been through foreclosure is to buy an REO. An REO is a “Real Estate Owned” property that has been through the foreclosure process, and has been purchased at the foreclosure auction by the lender. Most of the time the lender is forced to take a property to the auction to eliminate or eradicate liens or taxis against the property, otherwise the lender would have to assume the responsibility off paying of these junior liens if the homeowner gave the lender a “Deed in Lieu of Foreclosure” and walked away.
The big difference in the lender getting the REO and reselling it is that the lender must bring any delinquent property taxes current for the buyer. The lender must also provide “fee simple” or “free-and-clear” title to the buyer. The process of clearing title deficiencies can sometimes be very expensive so buying REO’s eliminates these related issues.
Based on instances and facts presented, it is much better in purchasing an REO property rather than purchasing a foreclose property in an auction. Buying property in auctions would cause you more than what you have expected , but if you think that auction property is much cheaper the, just do physical inspection of the home that you are going to purchase.
