Clarification needed for buying pre-foreclosures

2 Replies

Hi, I bought a few foreclosures at the auction. I thought the process was straightforward and risk was tolerable. The only issue is financing (I used hard money with 30% down) and inspecting the property before submitting a bid. I like the fact that title comes clean- minus a potential lien.

I’d like to get into the game earlier. I think I have a broad understanding on how pre-foreclosures work, but this is what I don’t understand:

If you find a motivated seller, who is already underwater with mortgage payments behind and potentially some unpaid bills and taxes, how do you sort all that out? How do you deal with the bank threatening to take the property over?

Originally posted by @Tomas Janusas:

Hi, I bought a few foreclosures at the auction. I thought the process was straightforward and risk was tolerable. The only issue is financing (I used hard money with 30% down) and inspecting the property before submitting a bid. I like the fact that title comes clean- minus a potential lien.

I’d like to get into the game earlier. I think I have a broad understanding on how pre-foreclosures work, but this is what I don’t understand:

If you find a motivated seller, who is already underwater with mortgage payments behind and potentially some unpaid bills and taxes, how do you sort all that out? How do you deal with the bank threatening to take the property over?


Banks (lender/servicers/financial institutions, etc.) don't "take property over". They exercise the power of sale clause or, sue for a judgment in court to sell the home at public auction. That's not taking the property over. In the event no one bids, they take the property over. If you want to buy a property in foreclosure, get under contract with the seller and close the sale before the foreclosure.

Promotion
BiggerPockets
The one-stop-shop for REI
Find Local Home Improvement Pros!
Check out our network of trusted, local contractors for all of your home improvement projects.
Find a Contractor