Logan Utah Foreclosures

What You Need To Know About Buying Distressed Properties

by Lisa Udy on April 26, 2011

Today’s real estate market is full of distressed properties and what I mean by distressed properties, is short sales and foreclosures.

Now, when buying a home you go through a few steps such as negotiating an offer, negotiating repairs, getting the home appraised and so forth.

All of these are still viable with a distressed property purchase, but they may come in a different order and could be a little more difficult to accomplish. Here are a few things to watch out for when buying a distressed property:

What You Need To Know About Buying Foreclosures

With so many markets these days having foreclosures, it seems more buyers are looking for that awesome deal. Foreclosures sales used to be primarily for investors but now with so many to choose from, buyers are wading the foreclsoure waters. But it’s not all sunshine and roses on the foreclosure front, there are a few potential downfalls to be aware of.

First of all, banks aren’t going to give the home away. There in the business to make as much money as possible at all times, and giving away foreclosures below market value isn’t in the plan. Be aware that a low initial price on a foreclosure is a tactic to increase buyer activity. A bank will price low in order to receive multiple offers and drive up the price. Don’t be fooled into thinking you won’t have any competition.

Homes Are Sold As-Is

Homes are sold as-is with no warranties from the bank. Be prepared to put in some sweat equity in order to get the home livable. Foreclosures have usually spent many months sitting vacant and prior to vacancy, the homeowner probably didn’t have the cash to keep the up in good shape. Repairs may be minimal but they could also be quite drastic, so buyer beware.

Watch out for declining neighborhoods. Yes, that foreclosure may be a great deal, but how is the neighborhood performing? Is every other home on the block also a foreclosure? Remember, distressed properties bring down home values of a neighborhood and how’s that HOA doing? Are they in financial trouble because no one is paying their bills? These are a few things to look into before purchasing a foreclosure.

What You Need To Know About Buying Short Sales

I’m going to say it, Short Sales Suck! LOL – Okay, in all seriousness, they really do suck. Here’s why. First of all, the short sale process is entirely up to a third party who really doesn’t care if the home gets sold or not. There aren’t any standards in the short sale industry or regulations banks must follow, and last but not least, they take FOREVER!

Short sales are just more difficult than a normal sale, but let me tell you, if you get the right agent on both sides of the transaction they can be completed. Here are a few things to watch out for in a short sale transaction:

Short Sale Process Is Different

First of all you need to understand what a short sale is. A short sale is where the homeowner owes more on the property than what the current market will bare. The home is “underwater” as they say, and in order to complete a sale, the holder of the mortgage (usually a bank or large investor) must agree to forgive part of the loan amount. However, just because the lender is taking a loss, that doesn’t mean the home is going to be a screaming deal either.

Short sales will almost always sale at or close to market value. So, if you can find a home similar to a short sale, you may as well go for that instead and here’s why. Short sales take a long time to close. The average is three to six months, and I’ve even seen some take longer than a year. Seriously. It takes a long time to get a short sale to close, so be prepared to wait and wait and wait.

Negotiating With A Third Party

Negotiating with a third party is, simply put, a nightmare, especially if you’re dealing with a large bank. These banks have huge departments that deal with short sales, and many times the file gets passed around to numerous negotiators. And the kicker, most of the negotiators don’t have the power to approve anything. It’s a little ridiculous. So, if you plan on negotiating repairs, you can almost forget about it. If you want to negotiate a better price it’ll take weeks.

Okay, enough negativity. There is a positive in buying a short sale. The homeowner can avoid foreclosure and it should help with neighborhood property values. Even though as a buyer this doesn’t matter to you, I still feel it’s good for the overall health of a real estate market to decrease as many foreclosures as possible.

Still want to buy a distressed property? Excellent, we can help you with that. You can view all Cache County Foreclosures and Cache County short sales by visiting those links. We update our property lists everyday and even though I’ve ranted about the process, we are very knowledgeable in the short sale buying process. You can see what I mean by visiting the related links below describing those processes in more detail.

How To Avoid Going Into Foreclosure

by Lisa Udy on August 25, 2010

Facing a potential foreclosure? Well, in today’s real estate market, you are one of many. Ever since the job market started going south, foreclosure rates all across the country have continued to climb. Let me give you a few tips to try before the bank takes away your home. You can also view Logan Utah foreclosures by clicking that link.

Don’t Feel Embarrassed And Put Your Head In The Sand

The best thing you can do to avoid a foreclosure is confront the problem early. If you just lost a job, have huge medical bills, or you know your mortgage is about to go up do to an adjustable interest rate. Get in touch with your bank and do it now before it’s to late.

The first step to avoiding foreclosure is to take action. Chances are if you’re reading this, you’ve already missed some house payments. The best thing you can do is contact your mortgage holder/bank and find out what options you have.

Many banks today are working with homeowners to avoid foreclosure. They don’t want to foreclose on your home if they don’t have to, it costs them too much money. Talk to your bank about working it out.

Ask for a forbearance which will allow you to stop making payments for a while as long as they add the lost interst back into your loan. You can also ask to re-structure your loan if it’s about to get a larger interest rate.

They may increase your loan payoff time in order to skip some payments, they can also let you pay interest only until you get back on your feet. It never hearts to ask, but not asking can leave you homeless.

Contact A Government Approved Foreclosure Avoidance Counseling Company

The government knows homeowners are struggling, and they have put in legislation to help homeowners avoid going into foreclosure.

One of these peices of legislation is called Homeowner Affordibility and Stability Plan (HASP) which allows some homeowners access to Making Home Affordable (MHA) loan modifications to refinance or lower monthly payments.

These agencies provide services free of charge so you don’t have to worry about paying for the program. There is NO need to pay a private company for these services.

If you’re receiving a bunch of letters in the mail claiming to help you avoid foreclosure if you pay an upfront fee burn them. These are scams. Do not pay anyone money upfront to negotiate with your bank. Period.

You can find a counseling agency that has been approved by HUD by checking out the list at: Foreclosure Avoidance Counseling. You can also check out HOPENOW.com a website that provides support and guidance for distressed homeowners.

Talk To A Professional About A Short Sale

If you have a valid hardship, and the banks won’t budge on your loan terms, a short sale could be your next step. A short sale is where the bank allows you to sell your home for less than you owe on it.

Because home prices have dropped since the bubble in 2005, more and more homeowners owe more than they paid on their homes. Because of this, short sales are becoming quite popular in today’s real estate markets.

When you’re looking for a short sale agent, be sure to get an agent that has a proven track record for short sale success. You do not want to get an agent that is clueless to the process.

I would also recommend talking to a real estate attorney who is experienced with short sales. There can be numerous legal problems when dealing in short sales, and you should always get legal advice from an attorney, not a Realtor.

Find out the tax implications from a CPA (Certified Public Accountant) and never assume you won’t have to pay back money on a short sale. The only person you should ask for financial or tax advice from is an accountant, not a Realtor.

Prepare Yourself Emotionally

When facing difficult financial times, it’s always best to try and find someone to talk to. I would recommend seeking help from a counselor or family members who understand your situation.

Having people in your life that you can talk to may not help you avoid foreclosure, but it will be a blessing during these tough times.

Foreclosure is extremely stressful. Not knowing what will happen next or where you’re going to live is up there with the worst. But keep in mind, it’s not the end of the world.

It’s a chance for a new beginning, and a chance for you to rearrange your lifestyle. A minimalist lifestyle is good for the soul, and it will give you time to evaluate the next steps in your life.

I hope you found these tips helpful for your situation, but please talk to your bank as soon as possible. You never know what you can work out until you try. Good Luck!

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Buying Logan Utah Foreclosures At Public Auction

by Lisa Udy on August 24, 2010

Yesterday I discussed buying a foreclosure during the pre-foreclosure process, and today I wanted to move along in the series to the public auction phase. Once a homeowner is foreclosed on, the banks will hold an open auction for the home.

The public auctions in Logan, UT are held at the Logan justice court located at 135 North 100 West. In order to participate in the public auctions, you must have a partial down payment up front and you have to pay in full within 24 hours of the auction.

You can find all public notices by visiting the city recorder at the courthouse or online at Utah Legal Notices. (Link takes a while to load so be patient.)

Attend An Auction To Learn The Process

Logan Utah Foreclosure Auctions

If you’re new to the process, the best thing you can do is attend one in person before you start bidding. These auctions are public so it won’t hurt anything to get in and get a feel for how the auctions in your area are conducted.

The auction will start out with the listed opening bid and can go up from $1 to $1,000′s of dollars at a time. Just like any auction, if no one bids, than no one wins. The home will become bank owned and will be listed by the bank, a Realtor, or a government agency.

Once the bidding starts it’s free reign. As an investor, don’t get caught up in the excitement and over do it. Since most auctions require you to pay in full at the auction or within 24 hours, you won’t have much time to get extra funds if you go over your planned limit.

Do Your Homework Before Purchasing At Public Auction

Buying Logan Utah foreclosures at auction is not for the first time investor. There are too many potential hazards that you won’t know until you purchase the property and do a full inspection. However, if you feel comfortable purchasing a foreclosure this way, let me give you some helpful tips.

You should develop some sort of system to track foreclosure properties that interest you. Start your research in the early stages. Once you see a notice of default on a home that is within your criteria, you should drive by the home to get an idea of the condition of the home.

The condition of the exterior of a home can give you a general idea of the condition on the inside. Remember, if you purchase a home at auction, you won’t have enough time to properly inspect it, which is why it’s so important to do your due-diligence on a property before the auction.

When driving by, try to find a talkative neighbor to get the scoop. Ask them about the neighborhood, if they know anything about the property, and ask them if they know anyone else who has information. You might also be able to talk to the owner about the property, but tread lightly. Distressed homeowners won’t be too happy having you poking around their business.

You’ll also want to run a preliminary title report on the home before you go to auction. If their are other liens on the property, you could face some serious financial burdens if you purchase. You can obtain a title report from any title company here in Cache County.

Why Buy At Public Auction?

Most public auctions don’t work out. It’s hard to come up with the funds, and even though a bidder may win the bid, the bank may refuse the amount. If the bank doesn’t get enough from the auction they won’t let the home be sold and they will repossess the home.

Also, you most likely won’t be able to inspect the property prior to purchase which can lead to huge financial problems. It would be a safer strategy to wait until the bank repossess the home and buy it then. So, why even bother with a public auction?

That’s a good question. To be honest, I wouldn’t recommend buying at public auction unless you’re sure the property is in good enough condition that it won’t cost you a ton of money to make it livable.

Another reason is, of course, the potential to get a screaming deal. Most auctions start out well below market value, and if you can get a winning bid below market value that the bank accepts, you just gained instant equity. Other than those reasons, it’s just way to risky.

Buying a foreclosure at auction should not be taken lightly. If you’ve never done it, be sure to attend a few auctions to get a feel for the process. Make sure you do your homework on the property, and don’t over bid or get so excited about a property that you pay so much you don’t have enough money leftover for repairs.

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Contacting A Distressed Homeowner To Buy A Pre-Foreclosure

by Lisa Udy on August 23, 2010

Earlier, I wrote a post on the Logan Utah foreclosure process, and in that post I discussed negotiating with a home owner on purchasing their home while it’s in pre-foreclosure. In this post, I wanted to discuss this tactic in more detail.

Contacting The Homeowner When Purchasing A Pre-Foreclosure

A home is in pre-foreclosure when the bank submits a notice of default. These notices are public record and can be found at the local county offices depending on where you live. Here in Logan, you can find these defaults by checking out the legal section in the Herald Journal.

Once you know the property is headed into foreclosure, I would recommend driving by to view it before contacting the homeowner. If the home meets your criteria for buying contact the trustee or the attorney to confirm the property is still in the pre-foreclosure process.

Many times a homeowner will get a notice of default and find a way to reinstate the loan. Once you confirm the loan is still in default, you can move forward. Before you go walking up to the owner of the home, consider these alternative methods first.

Best Ways To Contact A Distressed Homeowner Facing Foreclosure

Send A Personal Letter

When contacting a distressed property owner, it’s best to be discreet. Your first option should be to send them a personal letter. In your letter you want to show remorse, because honestly, going into foreclosure is a nightmare. You don’t want to put pressure on a distressed homeowner, they’re already under enough as it is.

Let them know you saw their NOD in the paper, and you wanted to offer your help by purchasing the property before they get foreclosed on. Something like this:

Dear So and So,

I recently noticed your home in the Legal section of the classifieds and was hoping to help you out. I understand you may not be open to help from a stranger, but I felt your home would make a perfect fit for my needs.

If you aren’t able to keep your home from foreclosure, please give me a call sometime to discuss the purchase of your property before you go into foreclosure. Foreclosure will affect your credit drastically, but if we can negotiate a deal, we can save you from foreclosure, and you might be able to get a little equity out of it.

I can only imagine what you’re going through. Please don’t take this as a hard sell letter. I truly love your home, and I would really love to help you avoid foreclosure. I love the way you planted that flower bed in the front of the sidewalks and I really love the paint color of your front door. If this is something you would like to discuss, give me a call at 123-456-7890.

A personal hand written letter is the best way to contact a distressed homeowner. This letter is something I came up with, and you can use it if you want. Be sure to talk about what you like in the home as I did about the flower bed and the paint job. Let the owner know you’re not here to steal their house, but to take care of their home.

Contact Them By Phone

If you’re personal letter doesn’t receive a response, you can try and contact them by phone. When you talk to a distressed property owner, don’t hard sell them. Most people feel embarrassed when talking about foreclosure. You need to reassure them that this is something that happens, and you only want to help.

Let them know you want to help them avoid foreclosure by purchasing the home. Be kind but don’t beat around the bush. Keep the conversation short. Tell them to think it over, figure out the numbers, and get back to you. If they call you back willing to sell, if the numbers work, than you probably just got a great deal.

Meet Them In Person

The last option you want to do is confront them in person, but sometimes it’s the only way to get a hold of them. Many people will ignore your personal letter or throw it away, and you may not be able to get their phone number. One of three things could happen when you confront an owner:

The homeowner could become very upset and throw you off their property; no one likes to go into foreclosure. They may be open to negotiations and sell the home, or they may just decline your offer as they plan on paying the backed payments.

When approaching the owner you need to recognize their rights as the owner of the home. If they tell you to leave, you need to leave. Do not pressure them if they are not open to you purchasing their home. If they don’t want to sell, you’re going to have to wait until the property goes to auction.

Buying a home during the pre-foreclosure process can be very positive. You can save a home owner from the affects of foreclosure, keep the neighborhood values from dipping, and purchase a property at a great price. But you have to approach the situation delicately, and be patient. If you are interested in purchasing Logan Utah foreclosures, please give me a call so we can discuss your options.

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