Foreclosure Purchase

I got inquiries about purchasing foreclosure properties, since some smart investors have followed the market closely and are wondering whether it’s a good time to jump in now.
Foreclosure sales are particularly sensitive and tough to deal. I will list some of the situations:
1. If borrower misses mortgage payment for 3 months, NOD,  notice of default is  made to public, the lender has the right to inform any trustees, interested parties who has a lien on the property. The borrower has the right to recover the loan within 90 days of NOD. 
2. A short sale (the loan amount on the property is greater than the fair market value of the property). Buyer may have to take to chance of all kinds of situations involved in the property. e.g. second lien, tax lien etc.  Sale difference to be taxed on 1099 from lender.
3. Overbid situations: if property is located in a highly desirable area and in fairly good conditions. There may be more interested parties in bidding, thus, a multiple offers scenario. Buyer may not get a fair market value of purchase but still had to take all risks mentioned above. In this case, the lender should be very pleased if the sale price covers the default loan.
4. Ill tenants on the premises. Have to put out eviction notice and risk property being damaged.
It’s not easy to process a foreclosure transaction, the average processing time is longer than a normal 30, 45 day escrow. The most important thing is to understand clearly of all details of the property.
Hidden or twisted truth of the property may be presented due to the foreclosure circumstances, a thorough investigation of the property is a challenge.


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