subject: Foreclosure Homes: Why They Sell [print this page] Foreclosure homes are some of the most sought-after properties in the foreclosures market. Many investors find them profitable and some even spend a huge amount of resources just to find them. While foreclosures are popular for their inexpensive prices, causing many buyers to prefer them over building new homes, not all cheap foreclosures are considered foreclosure homes.
Foreclosure homes actually refer to those properties that have received notices of default filed in public records. A notice of default signifies that a homeowner has been at least two months of arrears in mortgage payments. When the borrower fails to make his loan current, the lender files a foreclosure against him, and his property is considered a foreclosure. The primary purpose of a foreclosure is to sell the property to a third person in order to recover what is still owed to the bank or lender. However, not all foreclosures go into actual public sale since borrowers are allowed to make amends on their loans to avoid seizure.
Why They Sell
Foreclosure homes can be a profitable investment given the right circumstances. There are those who prefer to enter into a short sale in order to avoid tainting their credit with a foreclosure record. A short sale means that the owner himself sells the house and apply the proceeds on his loan. If you are a keen negotiator, then you can take the opportunity to close a good deal with the owner.
A short sale makes a lot of sense especially if you take into acccount the benefits that accrue to all the parties. In a short sale, the buyer can have a house for a cheap price, the homeowner or seller could avoid dealing with a foreclosure and the bank or lender can recover their money faster than if they wait for it to sell either in an auction or as an REO property.
But there are foreclosure homes that go all the way to being bank owned homes. This happens when they are not sold at public sales due to inadequate bidding and other factors. These homes become real estate owned or REO properties, which means that they have reverted to the banks ownership and the bank will now sell them as part of their foreclosed properties inventories.
One of the primary reasons why many buyers also prefer buying reo properties is the fact that they are very safe to buy. When a property reverts to a banks ownership, the bank erases all liens andjudgements attached to it, thereby giving the buyer a perfectly clean and good title. Plus, if you can bargain for a better price and know how to make a winning offer, you may be able to buy a property that is worth much more than what you have spent.
