Saturday, February 08, 2014

No, you can not buy that foreclosure: Home buying tips

Recently a neighbor asked me if I knew about a foreclosure on our street.  She saw something on the "Internet" about a foreclosure but there was no address given (unless she paid money to see the list).  This is a question I get a lot.  Similar questions are "Where are all the foreclosures?", "This site says there are 15 foreclosures in my area.  What are the addresses and how do I buy them?".

The majority of foreclosure houses are listed on the MLS just like any other property. There is no secret place for the average buyer to purchase foreclosure properties (REO or bank owned). Photo Eric Rojas, Real Estate Broker, Kale Realty

Here's an email I sent to my neighbor answering these questions in general. This is my personal experience buying foreclosed properties with clients. I'm not a "how to buy foreclosures expert", but I think it covers the experience of the average Joe or Jane buyer trying to buy a house.

I wrote:
"Foreclosure actions are public record.  You probably saw this on a third party web site like Zillow or Trulia that requires you to pay a subscription (for RealtyTrac) to see actual addresses.  RealtyTrac  aggregates public foreclosure filings and makes them easy to read (these are homes that are in LEGAL foreclosure process but the bank has not taken legal possession).  You can't buy these types of houses unless they are for sale on the market and the lender will allow a sale (short sale).

To find the address of the property you'd have to pay for a service or go to the Cook County Recorder of Deeds and look up every address on our street to find the Lis Pending Foreclosure filing.  It could be one of the condos or a house on our street.  The record advertised by the "Internet" could also be the foreclosure building that already sold last year at the end of our street ($390K cash that will be converted to  a single family home). 

When a home goes into foreclosure, it could take a couple years before the judicial sale.  Then, the bank would have to list the property with a broker for the public to buy.  You can't go direct to the bank and say "I want to buy a foreclosed property from you".  You could do that, but they won't sell it to you.  Most completed foreclosures are sold either bulk to investment groups, by public auction with public notice or they hire a broker like me to sell it.  Some brokers have a relationship with Bank REO departments, so they list and sell many foreclosures as a business model.

For me and you, the only way to buy a foreclosed property is either at public auction or when it lists on the MLS like most properties."

If you are looking for a house to buy in Chicago, please contact us.  It may well be a foreclosure or short-sale that you offer on.  There is no secret place these properties exist.  However, you may need us to act quickly on listed properties and to help confidently maneuver the purchase process. Ask our clients how we have kept them in deal and helped them reach their goals.

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