I am looking for a deal.
I want to buy a foreclosure.
I saw on Zillow that this home is a foreclosure.
Do you know if banks will sell me this house?
If you are a real estate agent, you will hear the above statements and questions from time to time. I have been hearing them quite often the last few weeks, especially the “I saw on Zillow that this home is a foreclosure”. I received a call over the weekend from a couple who were in front of a home I have listed for sale. They asked the usual questions:
How much is it listed?
How many bedrooms and baths?
How long has it been on the market?
At the end of the conversation, they said this house isn’t right because they want to buy a foreclosure. They really wanted a good deal. They saw a home on Zillow right around the corner, it is a foreclosure (according to Zillow) and that is the one they really wanted to have. They wanted to know how they could buy this home. They gave me the address so I can do my research. Yep, Zillow did say foreclosure. But is it really?
SPOILER ALERT: Things aren’t always what they appear to be online. Sometimes, sites like Zillow are correct, the home has been foreclosed on or is about to be foreclosed on. Sometimes, they pull the information from public records as soon as the bank files the lis pendens. (They might have it labeled as pre-foreclosure on the site) Sometimes, it is an old notice and they just never updated the site’s information. You either need to call someone like me to check or do your own research. The two sites I recommend looking at for your own research will be the Brevard Property Appraisers site to see who the current owner is & if there have been any recent sales and the Clerk of Courts site to see if there is a lis pendens filed or foreclosure date recorded on the property.
Brevard Property Appraiser https://www.bcpao.us/
Brevard Clerk of Courts https://vaclmweb1.brevardclerk.us/AcclaimWeb/
Foreclosure or bank-owned home (aka REO)
When I hear a consumer/future buyer mention something about buying a foreclosure, I know that isn’t exactly what they want. They really want a bank-owned home or an REO. What’s the difference? The foreclosure the legal procedures where the bank is about to take back the home from the owner because they stopped paying the mortgage. Here in Brevard County, this happens on Wednesdays at the Titusville Courthouse. This is where you could have the chance to buy the property as a foreclosure from the bank at this public auction. Sounds pretty simple, right? What you need to know is IF you are the winning bidder, you will receive a Certificate of Title that does not come with a title insurance policy. Any other liens that are on the property are also yours. You also have to have the cash in hand to make the purchase. 5% is due at the time of you winning the bid, the remaining 95% is due at the close of business. That is an abridged version of buying a foreclosure.
OR, you can consider buying a bank owned, REO property. These homes have been through the auction, the bank did not accept any of the bids and took the property back. Since they are not in the business of owning real estate, they will list the property with an agent that specializes in REO sales and it will appear in the local multiple listing service (MLS). You have the option of buying with cash (cash is king and is always an option for buying real estate) or some type of financing. (Some bank owned homes are in poor shape and financing might not be available). You will receive a title commitment and title insurance when you purchase a bank owned home.
If buying a foreclosure still seems interesting and is a direction you would like to go to buy a home, I recommend you put together a team to help you with the process. It is not as simple as showing up on a Wednesday in Titusville at the courthouse with your checkbook. You will need to do your research and homework. I am sure there are other parts/components you might need, here are the first 3 I think you should have:
One of the most important pieces is the title company and/or real estate attorney. Have them do a simple title search or lien search on the property to see what else will be conveyed with the house. There are a lot of great title companies in Brevard County, I really recommend partnering with one that is also owned and operated by a real estate attorney. The title company side will be able to provide the title search but you need the attorney to help guide you through any clouds or issues that come up.
The second important piece is a real estate agent. Have them pull the comps for the area. See what homes are selling for to help you determine a good price point for you to make the purchase and what the home could be worth if you get the property and do some work/updates.
The third important piece to your team is a good contractor. You need someone to speak with on what potential costs of repairs and updates are. You also need them to walk through the property to help determine what kind of work must be done and what you would like to done to the home.
Let me know if you would like an introduction to a good title company, real estate attorney, general contractor, or real estate agent.
If you are in the market to buy a home, I would bet you are looking to get a good price on a property. This does not have to be a foreclosure. It could be a standard sale, an estate sale, or a short sale. Make certain you do your research and that you are working with a real estate agent that is knowledgeable on the area you are looking to buy or move to. You also need to be comfortable with the person and confident they can do the job of finding you the right home. If you are looking here in Brevard County, I would like to apply for the job of finding you a home. If you are looking outside this area, still give me a call. I can help get you connected with someone who knows the area you are considering.
Do you know someone who is buying a home and mentioned wanting a foreclosure? It is OK to share a link from this post with them.
Have you purchased a home through foreclosure or a bank owned home? Please comment below with your experience or let me know any questions you have about the process.
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Curious to see what it is like at an auction? The video below will give you some insight.
About the author:
Eric Larkin is a Broker Associate with REMAX Solutions. He lives, works, and plays in the Cocoa Beach area. Eric has been helping buyers and sellers with their real estate needs since becoming a real estate agent in 2003. His focus is always on helping, answering your questions, and doing everything possible to make certain you have a smooth transaction from beginning to end.
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