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Home Buyer Video Series: Foreclosures

Todd Jones reviews

Hi, I'm Todd Jones, and thanks for watching my Home Buyer video series. This is meant to help you out whether you're a first time buyer, or you purchased several homes before. I mentioned this - things change in the market so it's important to stay informed, and that's what I'm here for, to help you out. Now a lot of people ask me - because a lot of people want a good deal, and I get that - and they say, "Todd, where can I find foreclosures? Where can I get the really good deals?" And in certain markets, a short sale might be a good deal. Here's my answer. There's two places to find foreclosures. One is on the courthouse steps. The other one is just on the market - they're listed by realtors. Now, the difference is-- and the courthouse steps, that is where the bank has foreclosed on property, and the final step is they go to the courthouse steps, they have representatives there. It's very interesting to see. I've been to the steps in Norwalk with cash buyers before, and there are a lot of people looking to get good deals there: investors, mostly investors. Some people want to buy it to live in, but you have to really be flush with cash. When you go there, you have to come with cashier's checks prepared to buy the property all cash. It can be a very frustrating process because you might have done a whole lot of research, have your eyes on a property, and then you get there and guess what? It's not even for sale anymore. They pulled it off. Maybe the person that was being foreclosed on, started negotiating a short sale, so they pulled it off. Or, maybe they made their payment. They redeemed the property, so it's off the market. So, it can be very frustrating. The other thing is I want to let you know, when you buy the property, that's it. You can't inspect it. You can't check the title. You can't go and look at it, make sure there are no tenants. You can't make sure that concrete wasn't poured down the sewer line. None of that can be done. It's yours and you've just given them cashier's checks for two, three, four hundred thousand, a million. Whatever it is.
The other place, the place that most people are more comfortable with buying a foreclosure is what we call an REO, Real Estate Owned foreclosure, bank owned. You might hear those different terms. They all mean the same thing. Let's say the property goes to the auction steps and no one buys it. Maybe the minimum bid was too high and an investor was like, "I can't make any money on that. I'm not going to buy it." When that happens, the bank takes the property back and then the bank will list it with the real estate agent. I did this for Bank of America for some time during the-- where we had tons of them. Then they slowly release agents because they don't need people to do it anymore because they run out of foreclosures. The next time the wave comes through, I expect to get that phone call to help them out again. The good thing about this kind of purchase is it's just like a regular escrow. Once you get your offer accepted, you have a certain amount of time, a contingency period which we'll talk about in another video, where you can inspect the property. You can make sure there are no tenants there. You can check the title, make sure there's no IRS liens, which would be a terrible thing if you bought it all cash. You can do every inspection known to man, whatever you want, and you can cancel the deal and get your deposit back if you don't like the property.
So the two different types of foreclosures are the courthouse steps, or the one listed with the realtor. Now if you want to do the one listed with the realtor and you're searching around for that and you specifically want to look for foreclosures, let me know, but my little advice to you is don't pigeonhole yourself into that because there may be a good deal out there that's just a regular person selling their home or maybe even a short sale. And I'll talk about short sales later too. I want this to be bite-sized, so I'm not going to go on any further. If your head is spinning, feel free to give me a call and ask me some questions. Again thanks for watching. I'm Todd Jones. You're watching the Home Buyer video series. Stay tuned and look for another one in your inbox and if you want to jump ahead, just click below and go to my YouTube website where I have all of these posted. Thanks for watching.


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