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Foreclosures and Bank Owned Properties in St. George

Buying a home can take place in a variety of ways. One of the unique scenarios that might be a better fit for you is a foreclosure or bank owned property in St. George. We can help you navigate this type of real estate transaction, helping you find a property that is the right fit for your needs, budget, and risk tolerance. Contact us any time to learn more, and check out the foreclosures and bank owned properties for sale in St. George below. 

For more information about buying a foreclosure or bank owned property in St. George, check out the FAQs below.

Foreclosures and Bank Owned Properties for Sale April 16, 2024
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5 Properties

Foreclosure and Bank Owned Property FAQs

Because the process of buying a foreclosure or banked owned property is complex and different from other transactions, you may have some questions. We are always available to help, so contact us any time to learn more about finding your home in St. George, and keep reading below for answers to some FAQs.

What is a foreclosure?

A foreclosure property is any real estate property that is seized by a lender, usually a bank or mortgage company, due to the homeowner's inability to meet their mortgage obligations. When the homeowner is unable to continue meeting the obligations, after a sometimes lengthy legal process the home will be put up for a foreclosure auction.

The process generally goes like this:

  • Missed mortgage payments: the homeowner misses multiple mortgage payments, for any variety of reasons.
  • Notice of default: the lender provides a notice to the homeowner of their intention to initiate foreclosure proceedings if the outstanding payments are not made within a specified timeframe.
  • Pre-foreclosure: a period of time in which the homeowner has an opportunity to catch up on payments or negotiate with the lender to find a solution, such as a loan modification or a short sale.
  • Foreclosure auction and repossession: in the case of the homeowner being unable to resolve the delinquency, the lender may proceed with foreclosure. The property is repossessed, and the lender takes legal ownership, and then it will either be sold through an auction or put on the market.

What is a foreclosure auction?

A foreclosure auction is a public sale of a foreclosed property conducted by a trustee or a sheriff. This auction provides an opportunity for potential buyers to bid on the property. Foreclosure auctions are public events, and individuals can participate directly without the involvement of a real estate agent. While you can opt to buy a foreclosure property without a real estate agent, it is not a great idea. 

Foreclosure sales begin with a minimum bid that includes the loan balance, any accrued interest, plus attorney’s fees and any costs associated with the foreclosure process. In order to bid at a foreclosure auction, you must have a cashier’s check in your hand for the full amount of your bid. If you are the successful bidder, you receive the property in “as is” condition, which may include someone still living in the property. There may also be other liens against the property.

Foreclosure auctions can be complex. There are some potential pitfalls and inherent risk associated with buying these types of properties, and we can provide the experience and peace of mind you need. We can also help you identify potential foreclosure properties, assess their market value, and gather information about liens or other encumbrances.

What is an REO?

An REO (Real Estate Owned) is a property that goes back to the mortgage company after an unsuccessful foreclosure auction. You will see the terms bank owned property, REO, and foreclosure used interchangeably but there are some technical distinctions. You see, most foreclosure auctions do not even result in bids. After all, if there was enough equity in the property to satisfy the loan, the owner would have probably sold the property and paid off the bank. That is why the property ends up at a foreclosure or trustee sale.

Since what is owed to the bank is almost always more than what the property is worth, very few foreclosure auctions result in a successful sale. Then the property “reverts” to the bank. It becomes an REO, or “real estate owned” property.

Do I need to pay cash to buy a foreclosure or bank owned property?

While many cash investors do like to buy foreclosures, you don't have to be able to pay in cash in order to buy one. In most cases, buying a foreclosure at an auction will require cash or a cashier's check in hand at the sale, but REOs that are listed on the market can be purchased with a loan. 

Talk with a lender about your options. Some lenders offer specialized loan programs for this type of transaction, based on your eligibility. Some buyers use renovation loans, such as FHA 203(k) or Fannie Mae HomeStyle, which allow borrowers to finance both the purchase price and the cost of renovations into a single mortgage. Foreclosure properties, especially those sold in "as-is" condition, often require repairs or renovations.

If the foreclosure property is in relatively good condition and meets standard appraisal and inspection requirements, traditional mortgage financing may be an option. Before you set out to buy a foreclosure or bank owned property in St. George, talk with a few lenders to find out what kind of financing you might qualify for and whether it is the right fit for you.

What are the risks of buying a foreclosure in St. George?

In order to move forward with confidence in your purchase of a foreclosure, it is important to be aware of the risks with this type of transaction. Some of the potential challenges you might run into include:

  • Underestimating the work required to repair or renovate the property, as they are generally sold "as-is."
  • You may have limited information on the condition of the property, especially if you buy it at auction. There is the potential for some unpleasant, and expensive, surprises. 
  • Foreclosure properties may have outstanding liens or other encumbrances that can complicate the transfer of clear title. In some cases, buyers inherit financial obligations associated with these liens.
  • Some foreclosed properties are still occupied by previous owners or tenants. Evicting occupants can be a legal and logistical challenge, and might delay your ability to take possession. 

What are the potential benefits of buying a foreclosure or REO in St. George?

There are some obvious challenges and risks associated with buying a foreclosure in St. George, but they also represent the opportunity to make a great investment. If you have the financing and are up for the challenge, these are some of the benefits you might enjoy:

  • The most obvious is probably the discounted price. Foreclosed properties are often sold at a discount compared to their market value, ready for some sweat equity to quickly make them into a great investment. 
  • Foreclosure sales can be quicker than traditional real estate transactions, especially if purchased at auction.
  • While financing a foreclosure purchase may be a stressful thought to you, it actually might be better than a typical home purchase. Some lenders offer specialized financing options for foreclosed properties that might be a better fit for your needs, including renovation loans that allow buyers to finance both the purchase and necessary improvements.

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