Buying Foreclosures

Last week I touched on buying foreclosures and said it was a tricky business. The AJC had a great article in the Homefinder section of Sundays paper which was dedicated to buying foreclosures. This has become such a big issue I wanted to address it in more detail today.

Cherokee County had around 200 advertised foreclosures in the Cherokee Tribune this month that are scheduled for the court house steps on the first Tuesday of the month (November 6th). Just because a house is advertised does not mean it will ultimately get sold on the steps. There are a couple of reasons why.

1. The homeowner "redeems" the property. This can happen by several methods but most likely the homeowner was able to work out a payment plan with the lender. This is sometimes called a "forbearance agreement" (for more info click here) and the lender has agreed to postpone or stop the current foreclosure process.

2. The homeowner sold the property. Up until the day before the sale at the court house is scheduled, the homeowner can sell the property on his own. The closer to the sale date, the harder it is and the more likely the sale will not be able to be completed. It will also need to be approved by the lender. Here is where a "short sale" can take place (for more info click here) which is where the lender agrees to accept less than what is owed on the property to keep them from getting the property back. I have done a couple of "short sales" and lenders are becoming more open to them lately just because of the shear numbers of properties on the market and the number of properties the lender currently has in it's REO (Real Estate Owned) portfolio.

The bottom line is that lenders don't want the house back. What they want is a loan that is performing (payments are current and on time). Tomorrow I will talk about how to buy a foreclosure house with the least amount of risk for the greatest amount of reward.

Until then, if you have questions that can't wait, please call me @ 770-862-8002. If you know anyone who needs to buy or sell real estate in Cherokee or Cobb County, Georgia, thank you for considering giving them my name and number.

Michael Bradford
Associate Broker
Southern Prime Realty
770-862-8002