While searching through some foreclosure and FSBO (For Sale By Owner) listings at the best foreclosure government auction site a few days ago, I was amazed at the consistency of how low some of the prices on houses and properties are. That year saw 2.87 million U.S. properties with foreclosure filings on them — an all-time high. If there are a lot of foreclosed houses near the one you’re buying, an increased drop in value is likely coming. Foreclosed homes are dealt directly with the bank.
Once repossessed, they then put up the bank foreclosed homes for sale. Since banks are often eager to unload these foreclosure properties, they aim to break even with an asking price that’s typically the sum of the remaining mortgage note plus interest, lawyer fees, and penalties.
When they have to sell a home that they have repossessed, they offer it at market value, not necessarily for what is owed on the house. It’s possible that new property owner may not communicate with you at all about your tenancy after the foreclosure sale.
In purchasing homes or properties form bank foreclosure, you can always negotiate with the bank on the manner or method of payment. However, if the property has junior liens, the lender will not accept a deed in lieu of foreclosure because the junior liens will stay attached to the property.
Nevertheless, in an illiquid real estate market or if real estate prices drop, the property being foreclosed could be sold for less than the remaining balance on the primary mortgage loan, and there may be no insurance to cover the loss. If the homeowner hasn’t come up with the money within 90 days of the notice of default, the lender may proceed with the foreclosure.