When does a property become a Foreclosure?  A property becomes a Foreclosure as soon as the mortgage  payment is late.  This stage of the process is called "pre-foreclosure".  This can take months and in some states years.  Once the property is Foreclosed by the Mortgagee (Bank/Lender) they are now the legal owners of the property.  This may also take some time from Lender's possession of the property to the time that it may be listed "For Sale".  In many cases these properties are vacant.  In some instances the Lender might elect to sell the property occupied, in which case, it is up to the Buyer to evict Occupants once the Property Title is transferred.  This scenario is usually reflected by the price being considerably lower than a vacant property.  Residents in these occupied properties, in some cases, will not allow anyone to enter; not the prospective Buyer, nor inspectors which usually are involved in traditional sales.   But, the majority of Foreclosed properties are vacant, and usually for quite a while. 

Once listed the Buyers can now submit offers on the property with a price the Lender has determined would satisfy the debt.  The Buyer is now purchasing a property, in most cases, free and clear of liens.  Once the offer is accepted by the Lender closing of Title is usually within 3 weeks to 45 days, depending on Buyer's payment option (Cash or Mortgage).  Lenders usually prefer "Cash" as in some cases the property may have some repairs that will not be accepted by Buyer's Mortgage company.  Should that be the case, the Buyer may choose to apply for a 203k Loan, usually called a Construction Loan.  A Construction Loan will allow Buyer to purchase a property and address the defects of the home that the Buyer's Mortgage company determines are needed (usually within 6 months of taking possession of the property).

One very important factor in a Lender Owned property is that the property is sold in "AS IS" condition.  Many Lenders will state that not only will property be sold in "AS IS" condition but the Buyer will also be responsible for any repairs that the Town may require before issuing a "Certificate of Occupancy".  The cost of this Certificate, usually the responsibility of the seller, is now passed on as a Buyer's expense.  Many towns will consider issuing a Temporary Certificate of Occupancy so that Buyer may address these problems after procuring Title.

The Realtors at Living New Jersey Realty are knowledgeable and can make this process easy and stress free.  At closing of Title you will have a property bought at a fraction of the current market value.



Also called REO (Real Estate Owned) Properties or Bank-Owned Properties, are lender owned properties that result from a previous owner defaulting on the loan. One way or another, the lender now owns the home.

Maybe the homeowner just mailed in their keys and disappeared. Maybe the home wasn’t bought at auction. In any case, the lender owns it. REO properties carry all the downsides of Short Sales except that you’re more likely to get an answer within days or weeks on REO properties.

However, the bank is unlikely to take much below list price. They’ve already taken a big loss and usually these properties are listed pretty close to the rock bottom of what the bank will accept.



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