Hi folks,

As many of you know I am a newbie Agent. I am planning on buying my first home and I am seeking some clarification regarding buying foreclosed homes. Please bear with me I am totally ignorant when it comes to the foreclosure. Do I need to have a down payment? If yes how much down payment should I have (approximately)? Which are the best auctions/hits? Another thing that always scares me when I think of it, is the redemption right. Can you fix a foreclosed house and live in it immediately without fearing that somebody is going to redeem his/her property and throw you out? How can I break into short sales? I was told that I need liquid money for short sales. Is that correct? Please you don’t have to answer all the questions, otherwise you will need to write a book LOL. Any clarification or input would be much appreciated.

I am assuming that you will be buying this property from a bank? If so, some of your concerns will already be taken care.

Down Payment - The bank will tell you what they want. Usually $500 or 1% of the loan amount - whichever is greater.

Redemption Rights - The bank WILL NOT sell the property until the redemption period is over. Legally they cannot. So you don't have to worry about someone coming back on you for that. When you buy the home, you will get free & clear title. Of course that doesn't mean you shouldn't check the titlework and make sure! 8-D

Short Sales - that's more involved. Either you have to have a relationship with a bank, where you are ready to step in a buy a short sale when they have an opportunity for one. Or you have to work and market yourself to Owners who are in financial troubles and you agree to buy their property - but obviously their lender must agree to do a short sale. As far as I know you don't necessarily need liquid money, but you should at least be pre-approved and ready to go on a mortgage.

right of redemption is at the auction,like stated before reo lender has already exhausted redemption period.Auction rules vary from state to state in ga once it's sold on the steps it's gone no more redemption this is why investors love ga.In other states it can range from a couple of months to a year you could buy it and rent it without doing any work on it until the redemption runs out,even if they redeem it they usually will have to pay the state fees and penalties and interest to redeem and you would get some of that money.

Thanks guys for your clarifications. I really do appreciate all of them. I still have another question regarding the auctions. I was told that there are some secretive auction... what I meant not all the general public can have access to them is that correct?

Yes, I believe there are secretive auction, but I haven't found them yet. I've been locating preforeclosures for some time now & I found many little tricks that the banks do so that the public can not locate houses being foreclosed on. From putting listings in unusual newspaper to not listing the city.

As for your right of redemption period. The bank forecloses on a house and then goes into the redemption period where the house is boarded up and no one can enter the property for usual 3 months. Then the house goes up for auction. So if you’re buying at the auction your fine. If before the auction, during the redemption period you need to talk to the homeowner and the banker. Before the bank forecloses, or just gave notice of foreclosure, and the homeowner still owns the house - you can get away with just talking to the owner, but I suggest seeing what the bank has up its sleeves too.

Please see my posting of Giving Away PreForeclosures if you’re interested in doing business in the Chicago area.

It's interesting to see how each state differs in the foreclosure process.

In Ohio the redemption period is minimum 30 days AFTER the sheriff sale, and the bank has filed w/the court the certificate of sale, and more often than not, also for an eviction.

Before the sheriff sale it's just a reinstatement of the loan if the borrower can make up the missed payments, plus the legal fees from the bank.

I have 1,000,000 policy for damages and such.

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Ruperto the reason they said on short sales you need to be liquid is because when paying cash you can close really fast and the bank knows for the most part it's a done deal once funds are verified.You can usually negotiate a much lower price on short sales paying cash.Anything with terms,finanacing the bank considers a crap shoot on whether or not you will actually be able to buy the property so they are less likely to cut alot off the price.

redemption period depends on the state...what state are you in? a title theory state or a lein theory state. that is where you need to start.