July 18th, 2012
During the recession, foreclosures increased exponentially, and this left a significant amount of inventory behind in many markets nationwide. Because of their low cost, many corporate transferees may look at these properties as an affordable relocation mortgage options. However, there are things for companies to consider regarding these homes.
There are many ways to purchase a home that has been in a state of foreclosure, and not every option necessarily involves a home that has sat vacant for a significant period of time. A portion of properties are in default and will be sold off before they actually are officially foreclosed. Short sales can be discounted, but likely involve the lender, as the mortgage is likely underwater, which means that the market value of the property is lower than what is owed on the mortgage.
However, if the property is in possession of a homeowner who declares bankruptcy, the sale would occur by a court. This can make the process go significantly longer.
Foreclosure sales where entities bid on the property usually go to investors, as they can bid more and are more privy to the area's foreclosure rules. In addition, since some municipalities require cash for these purchases, it is typically easier for large investors to do this. However, some areas have mechanisms to aid private buyers who want to purchase their preferred home.
A major drawback to some foreclosed properties is the fact that it is often not possible to know the condition. People could still be living in the property, even if it is boarded up. If squatters are still living in the property, it will take further action through the courts to ensure that everything is taken care of, and there is no one left in the property. This could complicate a situation where the transfer date is fast-approaching.
If a transferee wants to avoid these difficult situations, it is recommended that they explore options through an investor. Since they may have already acquired the property through a foreclosure auction, it could be possible to make a purchase before it is handed off to a real estate broker and put back on the market.
With any foreclosure purchase, transferees should not overlook the importance of title insurance, since the property ownership history of foreclosures can be more muddled than many traditional sales.
Those looking for a foreclosed home likely need to contact a real estate agent who can work with them to find the right opportunity, as they will be more aware of the local market and be able to explain the options more clearly. These agents will help transferees find realistic properties and properly target their offers. Depending on the situation, it is possible to get an affordable home that is both attractive and reliable.
Starting this process in advance will improve the chances that the corporate relocation will be able to move smoothly. It will also allow the transferee to arrive at their new assignment on time and adjust to their surroundings more easily.