In today’s topsy-turvey real estate market, it seems that there are always a handful of agents and realtors that “insist” that buying foreclosure are a great bargain and everyone should have at least 4-5 of them˳
Well, to tell you the truth, some of what they are saying is truth but much is a fabrication of implied truth intending only to fatten their bottom line˳ Many real estate agents intentionally lie to get their clients to buy foreclosures so they can generate a commission˳ The problem is that you don’t need a real estate agent to buy a foreclosure! But that is not what I am going to discuss here today, instead, I am going to talk about why “not” to buy one˳
First of all, a brief explanation of what a foreclosure is:
Normally, a house is purchased through a real estate agent and a normal escrow handles the middleman issues and is the “neutral 3rd party”˳ There is the buyers agent and the sellers agent and the escrow officer handling the escrow˳ Once all the issues are resolved (title, loans, repairs, termite, etc) then the escrow closes and the buyer takes possession of the home or condo˳
The new buyer has taken out a loan for the property and pays monthly for that loan and if it is a 30 yr fixed, the payments are consistent every month˳ If it is adjustable then the payments change with the interest rate based on LIBOR or on the 10Yr note or equivalent˳
Suppose a buyer cant make a payment by the due date, then a late notice is sent out and the buyer has like 10 days to bring the loan current˳ If they don’t then a “notice of default” is sent and filed at the county recorders office˳ If the buyer still doesn’t pay then the lender forecloses on the property˳ They file a document with the county notifying the public of a pending sale and notify the seller they will lose their house˳ Once it goes to sale on the county courthouse steps, someone usually buys it for the back taxes or loan amount˳ It is too complicated to explain here about the different ways people can lose their homes, but for the sake of argument, we’ll say that foreclosure is the only way˳ Now, if no one buys the home at the auction, it goes back to the lender and they have what is called REO or Real Estate Owned˳ They don’t want the property, they want the money plus interest from the loan!
Now, what does the buyer do? The are forced to leave the house against their will˳ DO you think they are happy about that? NO, they aren’t˳ And guess what they are thinking? They are mad at the lender and do not even realize that they were the reason they lost their home˳ So in order to get back at the lender they might be thinking: “if I don’t get this home, then nobody does” and proceed to destroy the home˳ I have seen picture of vacant foreclosures that are completely wrecked˳ Mold on the walls up 3-4 feet, dog urine and feces all over˳ Broken walls and cabinets, missing fixtures, and the like˳ Still want to buy a foreclosure?? It gets worse! By law, they cannot even give a home warranty on the home, there is no termite inspection and the transaction is minimally monitored except the auction it off at the county courthouse˳ Nice looking little foreclosure might look nice on the outside, but inside is a whole other matter˳
My advice? Buy a home through a Real Estate agent and go through a standard escrow˳ You will be glad you did!
By James Noll – Realtor, USA Realty & Loans
Source by https://ezinearticles˳com/?Why-NOT-to-Buy-a-Foreclosure&id=2705034
