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Foreclosure or Foreclosed

by Michael Ross

With so many home loans being foreclosed, distressed homes have become a topic of discussion on television and in the newspaper.  Just last weekend, a well-advertised auction at the San Diego Convention Center sold 98 such homes.

When I was approached by several clients asking if "foreclosures are now a good idea", my response was that buying a house in foreclosure now – or at any time – may be a good idea.   If you come upon one, by luck or hard work, that suits your needs, and you are the winning bidder, and you can afford the all-cash purchase, and there are no unsettled legal issues or tax problems, and you are willing to fix the damage that is typically left behind by an angry former owner, and you are willing to accept the property "as is", then it could be a good idea and a good deal.  Most buyers are probably not aware of those considerations and caveats.

It is my experience that most people, including real estate agents, banter around the term "foreclosure" to mean something very different.  They mean a house that has already completed that foreclosure process, which is meticulously set out in law, and is now on the market by the successful bidder.  That winning bidder may be a bank, an individual or some other entity.   As you can reason, once a house has surfaced from the lengthy foreclosure process, it is just another house like those in the MLS.  Unfortunately, some real estate agents use the term to generate a feverish interest in a property that is now no more a "good deal" than the house down the block, and often is less a good deal because of the premium paid for the "foreclosure" label.

After all that, you may now understand that those 98 homes auctioned last weekend were foreclosed properties.  Each finished its own foreclosure process owned by the very lender that foreclosed its loans.  Nobody else bought the houses at the 98 individual foreclosure auctions.  A property in foreclosure is one going through the foreclosure process.  A foreclosed property is one that has finished the foreclosure process with a new owner.

As with any home purchase, I suggest you first determine which geographical area you desire and how much you can afford.  Those two items should get you going toward a smoother house purchase.  The next step is finding the particular one you want.  Trust a real estate professional to help.  It is a good idea to be open to a foreclosure during your search through foreclosed and other homes.  Your real estate professional and you can determine which is a good deal for you.

Michael Ross, Broker

Sales - Management - Loans

760.438.1113