Squaw Peak in Phoenix Arizona

Arizona Foreclosures




As you have undoubtedly heard in the news lately, the rate of foreclosures is up across the country.  The government's recent bailout of Fannie Mae and Freddie Mac offers relief to some homeowners, but not all.  Some media outlets are even reporting that 1 million homes will have been lost to foreclosure by the end of the year.  There are many foreclosures currently available in the Phoenix real estate market.  For those people looking to invest in real estate, now is definitely the time.

A foreclosure happens when the borrower defaults on a loan and the lender repossess the property in order to sell it to satisfy as much of the debt as possible.  There are four possible outcomes of a foreclosure process:

1. Pre-foreclosure.  The borrower pays off the default amount in a state-determined grace period.

2. Borrower sells property.  During pre-foreclosure, the borrower sells the property and pays back the loan in full so that there is no foreclosure on their credit.

3. Public auction.  After the pre-foreclosure, the property is bought by a third party at a public auction.

4. REO (Real Estate Owned by the lender) or Bank-Owned.  The lender either agrees to take ownership of the property during pre-foreclosure or buys it back at a public auction.

Purchasing a Pre-Foreclosure Property
If you are interested in buying a property in pre-foreclosure, you need to do your research on a property: find out how much it is worth, make sure it is still in pre-foreclosure (since the borrower typically has 2-3 months to pay off the default amount), do a drive-by of the property to check out its condition and find out the estimated market value of the property.  You will need to contact the owner directly, which can be a long process in and of itself since many homeowners in default can have several months to consider all their options.  You will also need to negotiate the conditions of the purchase with the owner, the lender and any lien holders attached to the property.

Purchasing a Home Through Public Auction
If you are looking to purchase a home through a public auction, research is definitely a must as well.  Once you find out which homes are going on auction, drive by the property to see what condition it is in.  Sometimes, you may come across the owner and get information you wouldn't have otherwise been privy to.  Since the owners still have a little time to pay off the default amount before the auction and many auctions tend to be postponed for a variety of reasons, it is a wise move to double check with the county holding the auction as to whether or not the home your are interested in is still available.  Finding out the estimated market value before the auction is necessary to make sure you don't overpay for a property.

You will also want to determine your bid amount.  Many bidders need to bring either cash or a cashier's check to the auction in order to make their bid.  This may involve you taking out a home equity line of credit for a cash loan.  If this isn't possible, you may want to stick with checking out homes in pre-foreclosure or bank-owned properties because they only need for you to secure a regular mortgage loan to purchase them.  Arrive early at the auction and make sure to identify the auctioneer so that you know where they are located.

Once you win a bid, you must get all your documentation in order to prove that you are now the owner the of home.  Some states allow ownership to take place immediately.  However, others will still allow an owner to pay back the default amount and take ownership of the property back from you.  Contact a real estate attorney to find out the laws in your area.  If the trustee of the property doesn't evict the owners, it will be up to you.  If that is the case, contact a real estate attorney or even the local sheriff's department to help you with this.

Purchasing a Bank Owned (REO)
When you find a bank owned property you would like to purchase, drive by the property to see what condition it is in.  Make sure to find out not only the estimated market value, but the bank's break-even point (the unpaid loan balance, costs and fees accrued and any liens the bank paid off).  You can have your experienced real estate agent contact the bank to let them know of your interest in the property.  Make sure you are ready to buy by getting pre-approved for a mortgage loan.  Your real estate agent can negotiate a purchase agreement on your behalf and close the deal for you.  Make sure that your real estate agent stipulates that the deal is contingent upon a complete title search and a professional inspection before closing can take place.

Although the foreclosure market looks daunting, I would love to help you out with any of the Phoenix foreclosures you may be interested in.  Please give me a call at 602-526-2614 or feel free to email me.

Tell me exactly what you are looking for and I will put together a custom list of Phoenix foreclosures that fit your needs, including the cities of Peoria, Glendale and all of Maricopa County.


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