Phases of Foreclosure

Many people hear the term “foreclosure” and think they can get a steal on a property. However, the price you end up paying can be dependent on the phase of foreclosure. A house isn’t foreclosed upon overnight. Here we’ll break down the phases of foreclosure and the advantages of buying a home in each phase.

Missed Payments/Motivated Seller
Advantages:

  • Seller will be motivated to achieve a fast sale, may create an opportunity for below market purchase price.
  • Seller may be more likely to do repairs.
  • Seller might be amenable to providing major closing cost credits and other concessions.
  • Buyer can use regular mortgage financing.
  • Buyer can obtain desired inspections within standard due diligence/contingency period.
  • Seller must legally provide a complete history of property’s condition, problems, repairs, etc.

Pre-Foreclosure/Short Sale
Advantages:

  • Seller will be motivated for fast sale, increasing buyer’s bargaining power.
  • Buyer can do all standard inspections, including researching title during due diligence/contingency period.

Foreclosure Auction
Advantages:

  • Property will be sold for outstanding mortgage balance owed to foreclosing mortgage holder — this can be a low price for the property.
  • Cash payment requirements reduce competition.

Post Foreclosure/Real Estate Owned (REO)
Advantages:

  • Bank is motivated to get the property sold and will negotiate price, down payment, closing costs, escrow length, etc.
  • Title will be clear; buyer will not take on any liens, mortgage or back taxes of prior owners.
  • Inspections and mortgage financing are allowed within normal due diligence/contingency period.
  • House will be vacant.
  • Property will usually be listed on MLS; the bank will pay real estate agent’s commission.
  • REO sales close within a normal escrow period of time.

Depending on your timeline and budget, a home in foreclosure stage could be a great value and help expand your inventory options. If you’re interested in checking out these types of properties in the Mile High, give Metrowest a shout – we’d love to help you start the process.

Ken Blevins

About Ken Blevins

Ken Blevins, CEO of Metrowest Real Estate Services, is a veteran in mortgage and default servicing with more than 24 years of experience in collections, foreclosure/bankruptcy, loss mitigation and real estate disposition (REO). Blevins was an original co-founder of Metrowest in 2003, a Real Estate Brokerage and Services Company focused on the resale, recovery and liquidation of distressed real estate in Denver, Colorado and surrounding metros. Blevins assumed the role of CEO in January 2014 and provides strategic direction and has management accountability for the day-to-day operations. Under his direction, Blevins drives all default management operations to maximize asset value recovery and reduce loss severity through a strategy focused on customer service and state of the art technology. Blevins has 18 years of direct operational experience in all facets of REO Asset Management having managed large national REO Disposition contracts for Fannie Mae, Freddie Mac, Wells Fargo, JP Morgan Chase, CitiFinancial, GMAC Mortgage and other various financial institutions. Blevins specialties include REO asset management, real estate investment, bulk REO acquisitions and distressed asset recovery and liquidation, and he has directed the resolution and liquidation of over ten billion in institutionally-owned residential real estate.

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