So You want to buy a Foreclosure? *BWAHAHAHA!* |
|
|
So you want to buy a Foreclosure because you hear in the Media how great a market is for that property? And how easy it is to fix and flip? And you’ll make a ton of moolah?
*Snort* (Excuse me, that was the sound of me spitting out my coffee…) Do you have a lot of cash, time, patience and a strong stomach? Because at the bare minimum, those are what you are going to need to succeed. |
|
| First of all, let me explain the foreclosure process here in Hawaii. Don’t know what it is elsewhere, but this is where my Real Estate license hangs. Talk to a Realtor in your area if you don’t live here.In Hawaii, there are two ways a foreclosure occurs: either a judicial or non-judicial foreclosure process.
The judicial process of foreclosure involves the filing a lawsuit by the holder of the mortgage or deed of trust to obtain a court order to foreclose. This is used when no power of sale is present in the mortgage or deed of trust. The court declares a foreclosure and the property is auctioned off to the highest bidder. You will go to the auction with a cashiers check for 10% of the sale price and have to cough up the balance in cash at the end of the day if you are the highest bidder. These are usually held on the Courthouse Steps and can be called “Sheriff’s Auctions” here in Honolulu. The non-judicial process of foreclosure is used when a power of sale clause exists in a mortgage or deed of trust. This states that the borrower pre-authorizes the sale of property to pay off the balance on a loan in the event of the their default. The lender or their representative, typically referred to as the trustee, may execute the sale. There are all sorts of notices and time frames that have to occur in a non-judicial foreclosure, I’m not going to go into that here. Speak to an Attorney, Grasshopper… Up until three days before the sale, the borrower may stop the sale by paying the lien debt, costs and attorney’s fees. Also, even if your sale goes through and you are the proud owner of a foreclosed property, in Hawaii if the property was sold because of outstanding taxes, the seller has up to one year to get current with the taxes and they get the house back. And YOU, lovely buyer, are out of your money. I have done quite a few “BPO”s (Broker Price Opinions) for banks looking to do a Short Sale (more on that next post) prior to foreclosure of a property. This consists of me personally going out to the house to place an opinion of sale price on the property for the bank. The home may be in pretty good shape at the time I assess it. And then I have gone back to those same properties after the foreclosure and the occupants have been evicted. To say these properties have been trashed would be like saying Katrina was a Spring Shower. Plumbing ripped out, copper wiring ripped out, Appliances removed or destroyed, walls smashed in and bathtubs used as toilets. And those are some of the clean ones! Vindictive former owners will destroy a property as a “Get even” with the evil bank that talked them into a big loan they could not afford. Yep, it’s always the Lender and the Real Estate Agents fault, no personal responsibility there! I will be the first to admit there were quite a few lenders and agents that were crooked and went into a transaction just to make money, but don’t tell me there were not any greedy buyers involved. If you believe that I have a nice Bridge in Brooklyn for sale… I’m not going to outline the process here, if you still want to buy a foreclosure you should probably saddle up with a good Real Estate Attorney. And I’m not going to help you buy a foreclosure. I have more fun things to do like Root Canal Surgery… Aloha from the Hawaii Real Estate Biz! |
|


Like this Blog?










