A few things you didn’t know about buying foreclosures

November 20, 2006 | Real Estate | 6 comments

There is an increasing number of people interested in buying foreclosure property. The laws that govern this can heavily favor the homeowner and presents great risk for investors if the transaction is not constructed properly.

Unfortunately, there is always someone ready to exploit a consumer’s weakness. Foreclosure is a very draining emotional experience and can leave people vulnerable to making hasty decisions. As a result, many states have imposed laws to protect homeowners who are in foreclosure from losing their home to anyone who takes advantage of them. It can be a wide open hole of liability for investors in some states.

For example, in California this is covered under civil code 1695. There is very specific forms with exact verbage… even down to the font size, time periods for cancellation not present during a standard purchase, etc.

I am not familiar with the laws state - state but have come across others that have similar restrictions. It can cause your seller to come back after the sale and claim that he sold under duress and that you took advantage of his position with your low offer. A court can go either way on this and it can get costly to defend.

Your comments and questions are welcome.

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Resty Malia on January 5, 2007 at 9:55 am

When homeowner goes into distressed mode, most of them just want out! I have dealt to numerous homeowners who are on the verge of foreclosures, in preforeclosure stage to be exact. These folks are already on their last draw. They have exhausted every resources as far saving their home but no hope lingering on those actions.

As a real estate investor, you could be wearing two hats. One is mainly to build your real estate investment, the second is you could be the saving glory for folks who’s about to go into foreclosures.

A prudent investor, provides options to distressed homeowner. He abides by the state’s real estate laws. Putting everything in paper is the best thing to do. And at the same time, making it a win-win situation.

Check my site also http://www.buying-a-home-foreclosures.com

tom.voli on January 5, 2007 at 10:25 am

Thank you for your comment.

I have seen many homeowners who are in the foreclosure process that really want to keep the home. Very few want out so I have to disagree with you here. My company has a foreclosure division and I would see 10 - 15 new files a day during 2006 and I have found that more in this position actually would like a solution to be able to stay in the home.

Investing in foreclosures is a completely different topic and one that has it’s own areas of concern. Most state’s laws are setup to protect the homeowner from losing his home to investors who talk a swift game. In California civil code 1695 has very specific rules to engaging homeowners.

http://www.tomvoli.com/2006/11/20/a-few-things-you-didnt-know-about-buying-foreclosures/

Skip on January 13, 2007 at 12:28 am

I have been in the foreclosure business for over 30 years and find some home owners are just fed up with the process and want to get out of the house and mortgage payments. They have found out they are best suited to be renters.

On several occassions I have had owners call and tell me just come and sign the property over I would rather you have it than the bank.

I have also seen those that would like to keep their home but have no equity to save thier property and the reason for them being in foreclosure had not and would not change for months down the line. They were gonna lose their homes unless they were given some funds to start over and move on. I provide that service.

I have developed a program that if a person is in foreclosure and can not save their home, but sell it to me I will almost guarantee them I will be able to place them in a house in approximately a year under certain conditions and if they follow instructions. I can help them down the line, but presently they have no equity and no way to get out of their present situation.

There are lots of things people should know about foreclosure, unfortunately they don’t find out until it actually happen to them. By then it is too late. When I counsel them during my counselling period they will often tell me that had I known what you are telling me I would have done things differently.

I would like to see each and every person that I encounter in foreclosure that I am able to get a loan for them to keep their property. That is not the case. Life does not deal you a good hand all the time.

On the other hand I have been able to help a few that was in foreclosure with a loan only to find that almost one year to the date they are back in the same position they were the year before in foreclosure. Some learn and some don’t.

I fell as if I offer a valuable service to those that are in foreclosure as well as several options. The options I offer might not be what they want, but in a lot of cases those are the only ones available to them.

Now it is not my fault that they are in this situation, but I make it my business to try and assist them in any way I can with the several options I have.

I do my business in Long Beach/Los Angeles and am aware of most of the local and state laws concerning foreclosures.

My firm does loss mitigations, short sales, loans as well as purchases. We also offer a foreclosure counselling service to see if we can assist them down the road in about a year or so once things have changed if they change.

We are not particuliar which of our services they use, we are there to assit them select the options that will give them the most benefits.

Those that need my services please give them my email address I would be most interesting to see if one of my options or programs work for them.

tom.voli on January 13, 2007 at 8:59 am

Thanks Skip.

We are in the same area…I am in Orange County. Give me a call at (949) 766 5054.

Victor Patterson on October 24, 2007 at 12:33 pm

Tom, I am new to foreclosures. I have seen foreclosure websites that list a home at $10,000 left on the mortgage. These homes are in neighborhoods that home sell for $800,000+.
Does this mean I can buy this home for $10,000? Or is there a hidden past due tax lien? Hidden past due 2nd and 3rd mortgages?
i am interested not in investing. But just purchasing some property in an area I want to live in when I retire.
Thanks

Tom Voli on October 24, 2007 at 2:29 pm

It may be the only mortgage left on the property but there could also be liens of any type on the property. You should run a title search on any property you are interested in for a clear title picture.