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| San Diego Foreclosures |
San Diego Short Sales:
Buying a “foreclosure home” can mean a number of different things when
talking about San Diego foreclosures.
Typically someone buys a foreclosure because they want to “fix it and flip it”, or
because they simply want a good deal on a home. Knowing the types of
foreclosures in San Diego is an important first step towards purchasing one.
There are three distinct types of “foreclosures” in San Diego and it's critical to
understand the difference to have the most success in finding the right home for
you. The different types of San Diego foreclosures can be thought of in three
different groups: “before”, “at”, and “after” foreclosure.
A good deal on a San Diego foreclosure can be found through any of the
foreclosure types, but with different terms, risks, requirements, and disclosures
provided. The difference in the types of San Diego foreclosures really comes
down 3 important factors; What financing terms are available, Can the property be
inspected prior to purchasing it, and What disclosures and warranties are
available or provided.
Homes that are in the “before” foreclosure process are homes that are still
owned by the owner-borrower but are in default. These are homes that have been
issued a Notice of Default by their lender and are at the beginning stages of the
foreclosure process. The vast majority of these situations are due to non payment
of a mortgage payment for the past 60-90 days. These types of foreclosures can
typically be fully inspected, fully financed (sometimes even through the existing
lender), and come with all the standard warranties and disclosures.
These “foreclosures” are bought through the homeowner who is still the rightful
owner, but typically require negotiating with the homeowner and their lender to
perform a “short sale”. “Short sales” are when the homeowner’s lender(s) agree to
take less than the amount owed to them to release the home as collateral. This
creates a short or less than full payoff to the lender, or a “short sale”.
The vast majority of short sales are listed on the MLS, but finding homes that
already have lender approval for a short sale can be time consuming. These San
Diego foreclosure homes are the least attractive because the process can also
take 3-9 months and have complicating factors that cancel the sale altogether,
often months after you've waited for “lender approval(s)”.
However, occasionally the right deal can be found in the “before” foreclosure, or
short sale group because of the “distressed” situation the home is in. In a nut
shell, the homeowner is typically not getting any sale proceeds and therefore
usually doesn’t care what the price is as long as the lender(s) sign off on it.
Additionally, because the market has dropped and home prices are still in a
settling phase, lenders often have a hard time knowing what a home is worth,
especially when the time frame between your original offer and final their final
acceptance date can be many months apart. These homes can be found through
a local real estate agent vis the San Diego MLS.
The “at” foreclosure homes come from the defaults discussed above, but failed to
resolve the foreclosure through a short sale or other foreclosure aversion
process. These are the homes that get auctioned off via a “trustee's sale” on the
county court house steps. This happens after the lender has provided the
defaulted owner-borrower with a “Notice of Trustee Sale”, typically 6-9 months
after the original default or non-payment.
A small percentage of these homes are sold at prices that are truly 15-25% below
their market value but come with many risks and limitations. These homes come
with no warranties, often can't be inspected, and must be purchased with all cash
(or cashier checks). Additionally any occupants of the property and any liens on
the property not cleared by the occurrence of the trustee sale are the new buyers
responsibility, as is the unknown condition of the property.
These San Diego foreclosures can be by far the best deals, but are better suited
for investors with a all cash, real estate experience, and lots of risk tolerance.
These are not to be confused with the auction houses that advertise on T.V. or in
the newspaper, those are simply homes being resold in mass by a 3rd party. The
‘auction house” properties typically come from builders and occasionally the
“after” foreclosure group discussed below. These homes typically sell at market
value and have inspections, disclosures, and warranties similar to a regular resale
home.
The “after” foreclosure group of homes are the homes that don't get resolved
through a short sale or other foreclosure avoidance process, end up at a trustee's
sale auction, and then fail to get a bidder (buyer) at the minimum set bid price.
These homes end up as lender owned REO's, i.e. foreclosures now owned by the
lender. Most of the San Diego foreclosures end up in this group.
These homes are then resold by the lenders on the open market. They are fully
financeable, available for inspections, but don't come with full warranties and or
disclosures. These homes are typically sold for 5-10% less than market value and
can be found through a San Diego real estate agent via the MLS.
talking about San Diego foreclosures.
Typically someone buys a foreclosure because they want to “fix it and flip it”, or
because they simply want a good deal on a home. Knowing the types of
foreclosures in San Diego is an important first step towards purchasing one.
There are three distinct types of “foreclosures” in San Diego and it's critical to
understand the difference to have the most success in finding the right home for
you. The different types of San Diego foreclosures can be thought of in three
different groups: “before”, “at”, and “after” foreclosure.
A good deal on a San Diego foreclosure can be found through any of the
foreclosure types, but with different terms, risks, requirements, and disclosures
provided. The difference in the types of San Diego foreclosures really comes
down 3 important factors; What financing terms are available, Can the property be
inspected prior to purchasing it, and What disclosures and warranties are
available or provided.
Homes that are in the “before” foreclosure process are homes that are still
owned by the owner-borrower but are in default. These are homes that have been
issued a Notice of Default by their lender and are at the beginning stages of the
foreclosure process. The vast majority of these situations are due to non payment
of a mortgage payment for the past 60-90 days. These types of foreclosures can
typically be fully inspected, fully financed (sometimes even through the existing
lender), and come with all the standard warranties and disclosures.
These “foreclosures” are bought through the homeowner who is still the rightful
owner, but typically require negotiating with the homeowner and their lender to
perform a “short sale”. “Short sales” are when the homeowner’s lender(s) agree to
take less than the amount owed to them to release the home as collateral. This
creates a short or less than full payoff to the lender, or a “short sale”.
The vast majority of short sales are listed on the MLS, but finding homes that
already have lender approval for a short sale can be time consuming. These San
Diego foreclosure homes are the least attractive because the process can also
take 3-9 months and have complicating factors that cancel the sale altogether,
often months after you've waited for “lender approval(s)”.
However, occasionally the right deal can be found in the “before” foreclosure, or
short sale group because of the “distressed” situation the home is in. In a nut
shell, the homeowner is typically not getting any sale proceeds and therefore
usually doesn’t care what the price is as long as the lender(s) sign off on it.
Additionally, because the market has dropped and home prices are still in a
settling phase, lenders often have a hard time knowing what a home is worth,
especially when the time frame between your original offer and final their final
acceptance date can be many months apart. These homes can be found through
a local real estate agent vis the San Diego MLS.
The “at” foreclosure homes come from the defaults discussed above, but failed to
resolve the foreclosure through a short sale or other foreclosure aversion
process. These are the homes that get auctioned off via a “trustee's sale” on the
county court house steps. This happens after the lender has provided the
defaulted owner-borrower with a “Notice of Trustee Sale”, typically 6-9 months
after the original default or non-payment.
A small percentage of these homes are sold at prices that are truly 15-25% below
their market value but come with many risks and limitations. These homes come
with no warranties, often can't be inspected, and must be purchased with all cash
(or cashier checks). Additionally any occupants of the property and any liens on
the property not cleared by the occurrence of the trustee sale are the new buyers
responsibility, as is the unknown condition of the property.
These San Diego foreclosures can be by far the best deals, but are better suited
for investors with a all cash, real estate experience, and lots of risk tolerance.
These are not to be confused with the auction houses that advertise on T.V. or in
the newspaper, those are simply homes being resold in mass by a 3rd party. The
‘auction house” properties typically come from builders and occasionally the
“after” foreclosure group discussed below. These homes typically sell at market
value and have inspections, disclosures, and warranties similar to a regular resale
home.
The “after” foreclosure group of homes are the homes that don't get resolved
through a short sale or other foreclosure avoidance process, end up at a trustee's
sale auction, and then fail to get a bidder (buyer) at the minimum set bid price.
These homes end up as lender owned REO's, i.e. foreclosures now owned by the
lender. Most of the San Diego foreclosures end up in this group.
These homes are then resold by the lenders on the open market. They are fully
financeable, available for inspections, but don't come with full warranties and or
disclosures. These homes are typically sold for 5-10% less than market value and
can be found through a San Diego real estate agent via the MLS.
In summary, the “before” group of foreclosure homes offer the greatest with regards to inspections, financing
options, disclosures, and warranties, but typically are priced at the homes market value and can have serious
time delays.
The “at” group of foreclosure homes offer the greatest value, but come with no warranties, inspections,
disclosures, or financing, and have risks of property liens, property occupants, and property condition.
The “after” group of foreclosures offers the ideal middle ground for most San Diego home buyers, allowing full
inspections, providing some warranties and disclosures, and are fully financable, and are typically priced a bit
below market value.
It’s important to note that although most San Diego foreclosures fit into 1 of the 3 groups/types discussed above,
there are a myriad of differences each home purchase within each group could have, and it's usually crucial in
today’s market to have an experienced professional assisting you when deciding to buy a foreclosure in San
Diego.
Prestige Properties & Finance Brokers and Agents have over a billion dollars of experience buying, selling,
financing, and constructing San Diego homes. We'd loved to use it to help you on your next home purchase!
| Licensed by the California Dept. of Real Estate. License #01153458 An equal opportunity Real Estate & Finance Company. All information deemed reliable but not guaranteed. |
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