Sellers in Foreclosure

It's all too common for sellers in foreclosure to want to ignore the problem and hope it will go away. Some stick their heads in the sand. But help is available. Sellers in foreclosure have options.

• Sellers can keep a home through reinstatement, forbearance, mortgage modifications or repayment plans.

   

• Sellers can transfer title to a buyer before the redemption period ends by persuading the lender to accept less than the unpaid mortgage balance. Not all lenders will accept a short sale, however. This covers what lenders want from sellers. Negotiation is key.

   

• The I.R.S. will treat a foreclosure or short sale for tax purposes by debt forgiveness, and until tax rules change, sellers could owe the government taxes even though sellers lost money on the sale.

Buying Foreclosures & Short Sale Homes

Not all foreclosures and short sales are profitable. To pull a home out of foreclosure, buyers need to make up back payments to the lender, pay all imposed fees and either pay off the loan or make arrangements to sell the property. Few lenders will let a buyer assume an existing obligation.

• Buying distressed home involves three ways to purchase: from the seller in foreclosure, negotiating a short sale or buying from the lender after a public auction.
  

   

• Buying short sales is complicated and can take much longer to close than an ordinary transaction. Not all short sales are profitable, and this article explains why.

   

• Buying foreclosures before the home goes to a public auction involves negotiating directly with the seller. Buyers also have the option of bidding on a foreclosure at the public auction.

   

• Defaults hit home values.  Nearby homes will feel the effect, which could pull the market value of a newly purchased short sale or foreclosure even lower.
  

Fixing Up Foreclosures & Short Sale Homes

One way to make money in real estate is to "buy low and sell high." Couple that principle with fixing up the home or improving it, and the amount of profit can be even greater. Besides, many distressed homes fall into disarray and require repairs.