Economic recession has plagued many industries including the real estate market. And one negative off shoot of this societal predicament is the increasing number of home owners entering the foreclosure process. This is brought about by the financial hardship many borrowers experience, and as a consequence, they become delinquent with their mortgage payments resulting to their homes being foreclosed and/or eventually repossessed by their lender. On the other hand, this category of properties should not be altogether discounted. The key to being successful in entering a foreclosure deal is to know the truth about this process that lenders do not usually disclose of.
Truth 1: Lenders can profit just as much from foreclosures.
The main goal of a lender going through a foreclosure is to gain ownership of the property from the borrower who has been aberrant in his payments. Throughout the process of gaining possession, financial recovery is an intrinsic objective for the lender due to the expenses attached to the process such as principle loan balance, accrued interest, late fees and professional fees for lawyers and court proceedings. Once the repossession is acquired, the lenders can do anything as they please to the property. Turn into a rental, kept as an asset or sold for an amount not necessarily matching the repossession expenses. Thus, contrary to popular belief that lenders do not accumulate just as much earnings from foreclosures, they can actually control how not to sacrifice the profit.
Truth 2: Liens or judgments can be taken away from foreclosed properties.
This is especially beneficial for buyers. While most buyers are worried whether the property comes with liabilities, this is usually the opposite in most foreclosed properties, especially those that would go through public auctions. The lender would usually wipe out all junior liens or judgments and pay for the outstanding balance on property taxes in order to obtain a clean title. The good news is that some lenders despite taking care of such liabilities do not include these expenses to the asking price of the property. On the down side, when foreclosed properties are not auctioned, these normally have superior liens or tax issues.
Truth 3: Lenders do not bend over backwards just to give away foreclosed homes.
While foreclosed homes are commonly less expensive than properties in certain real estate markets, the lenders do not price them as such due to their desire to actually help buyers. They are mainly driven to quickly get rid of the property in order to recover financial losses brought about by the delinquency of the former home owner. The lower pricing is just another marketing strategy so they can have more earnings. However, there are select banks and lending agencies that actually sell cheap foreclosed homes to aid buyers.
Truth 4: Banks are not the only sources of the foreclosure market.
First of all, banks are large companies that have detailed hierarchy. This then would result to further legal work and sometimes repetitive processes have to be gone through before a foreclosure purchase will be closed. This would translate to lengthier process of acquiring a home. Thus, banks are not necessarily the best choice for getting a cheaper foreclosed home despite the fact this sector has the wide-ranging market. There are some private real estate listings that promote foreclosures as well.
One note though is that as a buyer, you have to think through about the perks of a lengthier process of formalizing a purchase deal. Given that the bank may have extensive legwork requirement, it may also result to a smoother legal transfer of the property title. Other concerns attached to the property may also be taken care of by the bank, such as the previously mentioned wiping away of liens and/or judgments.
Truth 5: Most banks cannot proceed with steps involved in the foreclosure process without court assistance.
Although banks are independent institutions, they still need to obtain a ruling form the court to implement a certain move. For example for evicting the home owner out of the soon-to-be foreclosed home, the bank has to get an order from the court which would authorize and require an officer or sheriff to supervise the process. Meanwhile, there are some locations that do not impose on banks to always follow through a judicial course of action. These lenders use the statement in the mortgage document declaring they have "power of sale." The property can then be enforced to be put on the market given that the home owner has not complied with the agreed payment terms of the remaining debts.
The world of foreclosures may be puzzling to home owners and some buyers. But with the truths above and proper assistance from an agent, one can surely succeed in pursuing a foreclosure.
The Real estate market can be an enjoyable, satisfying and lucrative experience for you. Whether you are a homeowner, a buyer, a landlord or simply a real estate enthusiast, get to know more about the latest in the real estate market now. Read more about it here: searchphoenixhouses.com/46085-Phoenix-AZ-Foreclosed-RESCity.aspx Phoenix Foreclosures and searchsurpriserealestate.com/46205-Surprise-AZ-Foreclosed-RESCity.aspx Surprise Foreclosed Real Estate.
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