|Foreclosure Listings

The 3 stages of foreclosures

Home Under Water or in DefaultIt is the wish Canadian real estate businesspersons to start making huge profits. While it is possible that they can make lots of money, it is indispensable that they know more about the real estate business.

Toronto magazine reported that many Canadians are dreaming high about the business irrespective of the condition of the real estate market. They wish to purchase choice homes at reduced prices and make lots of money. Many want to dispose them as soon as they get it. Some got interested because they want to become property owners while many invest in it for several purposes. Whatever is the reason, it is not easy to go about it. If you want to engage in the foreclosure process, there are various conditions, which you must overcome. Here are some points you must consider:

First stage: Default.

The first process you might encounter includes the pre-foreclosure process. At this stage, most of the homeowners might have defaulted on their payments, only waiting for the foreclosure to take effect. If you want to discover about the houses default, it is important that you consult your local courthouse, this is the place such foreclosures are registered. During this stage, you could bid directly from the defaulting homeowner.

However, there are instances where pre foreclosures are available, but that is for those desirable houses. You can purchase such a home at almost the cost of the appraised value. When you see a property that is sold at twenty to forty percent discount, you should know that such properties are located in undesirable places, or they need renovation.

If you decide to buy at this stage, you are allowed about ninety days to take action after receiving the default notice, which is usually posted in the house. After this, you have another 21 to 25 days to act after auction date notice is made known.

Second stage: Auction. 

If it becomes impossible to sell of the home during the pre foreclosure stage and at the same time, the owner was unable to meet his mortgage obligation, then the house would go for public auctioning. You can still find a good bargain, but you should know that it is not easy.

Here are some of the challenges you have to contend with:In most cases, those auctions never went through because they are usually cancelled for two reasons. It is either that the property was already sold, or the mortgage obligation was fulfilled.

When it is eventually sold, cash or checks emanating from the proceeds are sent to the trustees appointed by the court. Usually bidders do not have adequate information about the home they want to buy because they do not have sufficient time for inspection. Such properties are usually sold as it is, as there are no warranties. Sellers would not disclose problems associated with the building. Buyers would have expensive and unexpected repairs to contend with when they eventually pay for the property.

Not all auctions are equal. If the loan were covered by the Department of Housing and Urban Development, it would take ownership of the house. They could either sell it through agents or through auctions. Usually these properties do not turn out to be the bargains many investors thought it would be. This is because it is highly competitive.

If it is a home owned by private lenders, banks, and investors, it usually shows up after preparation. Investors should be aware of various laws available such as province laws and others about the property in question before they start to bid for it.

Moreover, they should make available at least ten to twenty percent of the property price when they win the bid on the spot. The remaining should be paid within the next thirty days. There are instances where such balances are paid within one day.

There are other challenges buyers encounter apart from the issue of financing. There are instances where the occupants of the home become a problem. The winning bidder has to contend with the problem of evicting such delinquent tenants out of the home. In some province in this country, it is possible for the previous owners of the property to buy back their property; this privilege is usually extended for one year. They have to buy it back after paying the amount they were owing and the cost of running foreclosure for the property.

Furthermore, you should expect some difficulties in the title insurance and the title search. You may be surprised about the huge unpaid bills for some work done on the home. There are instances of claims by other people who have a share in the property.

In some cases, the auction is conducted in front of the house; this would present opportunities for buyers to glance the house. There are instances where they are sold outside the home such as the internet. It is always not easy to get somebody with the key to help you access the home.

These imply that auctions are risky for many people. It is possible to see properties that have several back taxes, liens, loans and in bad condition. Buyers are advised to check for homes in homes sales at government and websites.

REO and Bank Owned Real EstateThird stage: REOs.

This is where an investor has his last opportunity. When it becomes impossible to dispose of the home, it has to revert to the lenders. When it gets here, it is given a new name that is the real estate owned.

It is obvious that many lenders do not like the REOs. This is because it amounts to non-performing assets to them, as it is nothing but an empty home. The value would continue to depreciate if it continues unoccupied. Apart from this, lenders still part with money in maintaining the home, if not it could become a thrash.

These lending institutions do not transact directly with the investors, they prefer to work with real estate agents. However, for those banks that want to save something from commissions, may decide to transact directly.

When it comes to this stage, it becomes possible for almost anybody to own a home. Experts have suggested that the way to go about it is to send an overnight letter to the bank, making it known to them that you are willing to accept their bid prices for the property. The bank may accept it because they would require a quick turnover. Banks want to make a profit and they know that buying them from lenders would save a lot of money for them.