Investing In Residential Property:foreclosure Outcomes
Foreclosures are one option when investing in residential property
. However, when forecloses are listed for a courthouse auction, they do not always end up being sold. You need to be aware of the various foreclosures outcomes to ensure you keep other options open when investing in residential property.
Cancellation
The owners have received their notice of default. Also, a notice of sale has gone out. The property is scheduled for a courthouse auction. However, before the auction, the property is removed from the schedule. The property can be removed from a foreclosure auction even on the day it is supposed to be auctioned off. There are various reasons why a foreclosure can be cancelled. First, the lender and the homeowners have worked out an agreement through mediation. It is also possible that a loan modification has been granted. Another reason is a short sale. The homeowners were able to sell their home at a loss and the lender finally approved the sale. Cancelled foreclosures will not appear back on the courthouse steps unless the foreclosure process is started again.
Postponement
If you were interested in investing in residential property that was postponed from the courthouse auction, you will most likely get another chance. Postponements are not like cancellations. The property can appear back at the courthouse steps without the lender starting the foreclosure process over again. Postponing a foreclosure gives lenders and homeowners time to work out a deal. If no deal is worked out in a certain amount of time, then the foreclosure will proceed to auction.
Unsold
Many times foreclosures remain unsold after an auction. The property goes back to the lender if no one buys the property. The main reason why no one would buy a foreclosure is because it is often priced for more than it is worth.
The lender now officially owns the property. The house is no longer a foreclosure but a real estate owned property or REO. REOs are also called bank-owned properties. The mortgage no longer exists on the house. The lender is also responsible for any tax liens. Lenders can take REOs and list them on the market. An REO may be a good option if you are investing in residential property. Unlike foreclosures, you can actually inspect the REO before you buy it.
Investing in residential property does take some time and effort. It is important have a plan in place if a cancellation or a postponement does happen to a property you are interested in. This plan should include looking at REOs.
by: Greg Hughes
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