Distressed Properties
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Distressed Properties

The Holzmann & DeBlis Team brings motivated sellers and interested investors together.

Three Stages of Distressed Property Sales

Pre-Foreclosure
The home owner has become delinquent in their mortgage payments but still maintains legal control of the property. The lender is threatening to, or may have started the Foreclosure process by filing a Notice of Default.  During this Notice of Default period, the property owner has 90 days to pay delinquent payments or sell the property to pay off the loan(s).

The purchase of a pre-foreclosure property usually benefits the buyer and seller.  The borrower/owner can walk away from the property with something to show for any equity they've built in the property and more importantly, the owner can avoid a bad mark on their credit history. The buyer has the opportunity to research the title and condition of the property and can purchase a property 20-40% below market value.

A buyer can work with a Realtor to identify properties in the pre-foreclosure stage.  Buying a property in pre-foreclosure involves approaching the borrower/owner and making an offer on the property.  It's important to have an educated and experienced Realtor guide you through this process.


Trustee Sale Foreclosure Auction
If the home owner fails to pay the loan arrears, the mortgage bank files a Notice of Trustee sale at the end of the 3 month Notice of Default period.  The Notice of Trustee sale is a 3 week process, at the end of which, the property is auctioned for sale. This public auction requires that properties are purchased with cash (cashier's check).


Bank Owned REO Properties
If the property is not purchased at the Trustee Auction, the foreclosing bank owns the real estate, termed as an REO property (Real Estate Owned).  The lender will typically re-sell the property to recover the unpaid loan amount.  Banks may take the initiative to make improvements and/or rehabilitate the property to realize the highest sales price.  It's important to keep in mind that the potential bargain for REO properties is usually less than a pre-foreclosure or auction property.