Welcome back buying a foreclosure or a Fixer-upper can be a great way to get a Deal on a house especially if you're Looking to put some Sweat Equity into it I purchased fixer-uppers such as this One and this one and both were awesome Real estate deals however buying a Foreclosed property adds an additional Layer of risk in today's video I'm Explaining the three best ways to find a Foreclosure the pros and cons as well as The steps you need to make today in Order to buy a foreclosed house and by The way a lot of research went to making Today's video so I greatly appreciate You guys if you guys hit the like button And also consider subscribing as well That helps support my YouTube channel And the growth of the channel as well Thank you so much for doing that and Let's begin today's video first of all Let me briefly explain what a foreclosed Home is a foreclosed home is owned by a Bank or lender lenders can foreclose on A house when a homeowner stops jobs Making their mortgage payments for a Certain period of time this means the Lender or bank takes ownership of that House and then tries to sell it to Recoup its losses a foreclosure can also Occur if the homeowner stops paying Their property taxes or their homeowners Association fees as well so let's talk About three main ways to buy a
Foreclosure number one you can buy a Pre-foreclosure in the form of a short Sale a short sale is when a lender Approves of a homeowner selling their House for less than what they owe on Their mortgage this normally happens When the homeowner is going through a Financial hardship and the lender Forgives the remaining balance of their Loan let me give you an example let's Say you owe four hundred thousand Dollars on your house but your home is Only worth three hundred and fifty Thousand dollars in this scenario you're Asking your lender are you willing to Accept a fifty thousand dollar plus loss In order to to avoid a costly and Lengthy foreclosure process I'll say This fifty thousand dollar loss would Actually be more than that because the Lender would have to pay real estate Agent fees a title and that's your Freeze and other closing costs as well Also on a side note in a short sale the Homeowner is at least 90 days or more Past due on the paying their mortgage so If you're interested in possibly buying A short sale how can you do this so Short sales are listed by real estate Agents and are listed on the multiple Listing service therefore websites such As realtor.com Redfin and Zillow will Have short sales listed on their Websites like a traditional home sale
You can have a real estate agent Represent you in the purchase of a short Sale and by the way if you guys want a Real estate agent referral I'm connected To hundreds of Agents across the United States if you guys want a real estate Agent referral then please email me at Info meet Jason Walter dot com also on a Side note a lot of people ask me what Are these pre-foreclosures on Zillow so Let me briefly explain what those are Because there's a lot of confusion Around this pre-foreclosures are not Houses that are for sale a Pre-foreclosure on Zillow for example Means that the homeowner is late on Their mortgage payments and a notice of Default or a nod has been issued by the County the nod becomes a matter of Public record and companies like Zillow Pull those records from the county and When Zillow does that they label that House as a pre-foreclosure however There's no guarantee that the homeowner Is going to get foreclosed on the Property or they're going to sell their House as well because this is only a Notification that the homeowner is at Least 90 days or more past due on their Mortgage payments if you guys want my Advice my best advice to you guys is to Focus on houses actually for sale rather Than focusing on pre-foreclosure workers That may not ever get listed for sale a
Second and more traditional way of Buying a foreclosed home is through an Auction now an auction can be online or It can be in person at the courthouse Steps for example laws vary from state To state but the major downside of Buying a foreclosed property through Auction is that it goes to all cash Buyers therefore if you want to use a Loan to buy foreclosed property an Online auction is probably not the best Option for you there's also many other Risks involved in buying a foreclosed Property through auction so let's Briefly discuss the home could have a Lien on it and you may not find out About this until after you purchase the House this is a big red flag and a huge Risk so for example if the previous Homeowner stopped paying their property Taxes then the county may have placed a Lien on the property and guess who has To pay for that you the new homeowner Now according to auction dot com they Recommend prior to placing a bid on a House to research any liens against the Property you can do this by hiring a Title company to run a title search or Potentially hiring a real estate Attorney this is much different than a Traditional home sale in which there's a Title company or a real estate attorney Involved which helps mitigate the risk Of buying a house that has liens or
Encumbrances to title another downside About buying a foreclosure is that Foreclosures typically have a lot of Deferred maintenance as well I've seen So many properties over the years in Which toilets are broken kitchens are Destroyed and there's holes in the walls For example another downside of Foreclosure auctions is that you will Likely not have the chance to order an Appraisal on a home prior to purchasing It without an appraisal you run the risk Up over pain of course yet another major Downside about buying a foreclosure at Auction is that you often do not get the Chance to even walk in the property Prior to buying it that's right imagine Paying three hundred thousand dollars in Cash to buy a home and you have no idea What the home looks like inside and what Repairs are needed therefore if you're Still interested in buying foreclosure At auction use Extreme Caution to say The least a third and somewhat less Risky way of buying a foreclosed Property is buying an REO or a real Estate owned property this is when the Foreclosed home fails to sell at auction Banks then hire a real estate agent who Then lists the REO for sale on the Multiple listing service so what are Some pros and cons about buying a real Estate owned property so keep in mind And REO is still a foreclosure so
They're often in disrepair and also are Sold as is in other words the lender who Was a seller will not do any pairs However though if you write an offer on An REO property and you get your offer Accepted this does not mean you should Waive all your inspections this is super Important I highly advise you guys even Though the house is sold as is that you Hire home inspectors in order to verify The condition of the property if it were Me I would want to uncover any issues With more expensive items such as the Roof Foundation sewer and the central Heating air system for example then if You find any major issues with the house That's going to cost a lot of money you Probably will have the ability to back Out and get your deposit back if you Have an inspection contingency in place So it depends on your purchase contract So please consult with your real estate Agent before backing out a buying a House also as I previously mentioned Buying an REO is sold as is therefore This is drastically different different Than a traditional home sale because Based on my experience of being a real Estate agent in the Sacramento area for About 10 plus years now it's more normal For a traditional home sales for buyers To ask for a request for repairs and for Home sellers to accept at least some of Those repair requests if you do decide
To buy a short sale in REO or any other House for that matter the number one Step is to hire a great real estate Agent the second step is to get Pre-approved with a lender once you have That pre-approval in hand you can start Your home search for short sales and Real estate owned properties you can Find these houses for sale on the Multiple listing service or Redfin Zillow realtor.com to name a few for Properties foreclosed by Freddie Mac Check out homesteps.com or for Properties owned by Fannie Mae have a Look at homepath.com additionally if You're looking to buy a distressed home Sale or a fixer-upper I highly recommend You include traditional home sales in Your search as well this because the Supply of houses that are foreclosed has Been very very low for years at the time Of filming this video also the Foreclosure process can take months to Years so do not expect a significant Influx of foreclosures anytime soon with That said please consider subscribing You haven't done so already hope you Have an awesome date I look forward to Seeing you on the next video [Music] [Music] Thank you
