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Buying a Foreclosed Property

Individuals contemplating buying a foreclosed property will have many decisions to make throughout the whole process. Uncertainties of foreclosed properties and the process of purchasing them often lead to questions like the ones answered below.

I am interested in buying a foreclosed property. Is it a bidding war type of sale?

At a foreclosure sale the highest bidder gets the property. It is similar to an auction. Most bidders have a good idea of what the market value of the property is before bidding. As an example if a house has a market value of $150,000 and a mortgage balance of $200,000 then a good price for someone to bid would be around $100,000.

If I buy a foreclosed property will I be responsible for the past due HOA fees?

It will depend upon which lender forecloses on the property. If the first mortgage lender forecloses on the property due to lack of payment then the lien put on the property by the HOA will be abolished. However if the HOA puts a lien on the property and then forecloses then you would be responsible for the fees.

My uncle’s house is being foreclosed. Is it considered fraud if I try to purchase this foreclosed property?

The lenders of foreclosed properties require that the transaction be at an “arm’s length”. This meaning that close relatives of the owner of the property being foreclosed cannot get the property. It is in fact illegal if you were to try to purchase the property at the foreclosure price and not notifying the lender of your relationship. You could however contact the lender, disclose your relationship and ask if you could purchase the property at fair market value. That way the purchase price does not reflect any conflict of interest.

The foreclosed house that I would like to purchase at auction still has the owner living in it. If I were to purchase this home what would I have to do to get the mentally impaired owner to leave?

You will need to legally evict the occupants if you are the winner of the auction. In this type of situation this process could take six months or more. The eviction process will add to expenses you would incur purchasing this property. If the occupant is mentally impaired, the eviction could take even longer. A guardian may be required by the court. All of these factors should be considered when deciding whether to make a bid at the auction for a foreclosed property.

I would like to buy my neighbor’s house that is being foreclosed. Is there a way I can buy the house before it goes up for auction?

You would need to make an offer to the lender. If the offer amount is less than the balance of the mortgage it would be considered a short sale. If the lender and the current owner accept your offer then you would be able to purchase the property before it even went to auction.

Having the right information and understanding of buying a foreclosed property can help when dealing with questions regarding foreclosures. Experts can help answer questions about foreclosure auctions or share the process of buying a foreclosed property. Get the answers fast and affordably by asking an Expert online.
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