I have been looking at some foreclosure properties and some of them are occupied.
Why would a bank foreclosed property not evict folks that are in the property prior to selling it if they are not renters with a lease?
If they are renters with a lease, it would have to be a long lease for the lease to still be active after the foreclosure process is complete. It seems that the bank would get a lot more money delivering the property empty.
What kind of possible headaches would it be buying a house with someone in it? I am assuming it is a past owner who does not want to leave.
@Lynnette E. Generally, it takes a while (1-3 weeks) from the date of the foreclosure to when an asset management company receives the asset to manage and has everything it needs to proceed with an eviction, if necessary. The first step is for the asset management company to assign a real estate agent to the property and have them make contact with the occupants. Usually, they offer cash for keys to the occupants. All of these things take time and it's a lot more time than the average real estate investor would take. That's just how it is.
Some investors/banks don't even want to deal with the occupants at all and would rather sell at more of a discount. It ultimately depends on who's in charge of running the asset from the bank side of things and there's no realistic way for potential buyers to know the exact reasons why the bank is running the asset the way they are.
One property I am looking at was foreclosed by Wells Fargo. They advertised it was advertised on a real estate auction site that accepts bids recently as occupied, but it was foreclosed on 2 months ago. I drove by and it is occupied.
I was hoping to try to figure out if the bank gave up on foreclosing--he was a hard case for some reason-- or if they did not even try.
You can't even start eviction until a minimum of 90 days after a foreclosure, and that's assuming they DON'T have a lease (Does not apply to occupant if former borrower). If they have a lease, they get the benefit of the duration of the lease (Assuming its a legitimate lease).
@Lynnette E. The Already foreclosed and had Title. If they “gave up” on the foreclosure, there would be no auction. Occupied reo’s on auction sites are common.
Wayne, you re right! they did finish the foreclosure, just stopped short of getting possession.