For many homebuyers, purchasing a foreclosed home may seem like a smart investment, but there are things a buyer must know before getting caught up in the foreclosure process. Understanding the different stages of foreclosure will help a buyer be successful at investing in a distressed property, says Travis Jones, Rush Properties’ former president.
Travis Jones of Rush Properties is an entrepreneur based in Olathe, Kansas with expertise in foreclosure real estate, remodeling and client relations. In the past 15 years, he has focused on increasing home values through property improvements within the Johnson County area as well as assisting homeowners in foreclosure with their needs through various compensation options. Recently he answered a few questions about foreclosures.
Q. Travis Jones, what is the main thing to remember when purchasing a foreclosed property?
Travis Jones, Rush Properties: Many newcomers to the market believe that foreclosures can be bought for next to nothing. While it is true that foreclosures are often purchased at serious discounts, the idea that someone can consistently find homes for 10 percent of market value is just not realistic.
Q. But are foreclosures still worth pursuing?
Travis Jones, Rush Properties: Oh, definitely. RealtyTrac reports that over the last 7 months the average savings on foreclosure purchases is approximately 29 percent less than full appraisal. That’s from a nationwide survey and is quite a significant savings!
Q. What else should buyers consider?
Travis Jones, Rush Properties: Often people think that to buy a foreclosure is to take unfair advantage of a homeowner in distress. Actually, if a buyer can find a seller in the pre-foreclosure stage as many realtors can help arrange, they can help the homeowner to leave with something to show for their equity in the property and avoid a major markdown on their credit report. Even if the property is bank-owned the sooner the home can sell, the better it will be for home prices in the surrounding neighborhood, which affects everyone.
Q: Can you explain the different stages of foreclosure?
Travis Jones, Rush Properties: Yes, a foreclosure consists of few broad stages: Delinquency and Default, Foreclosure Suit, Judgment Sheriff Sale and Post-foreclosure
Q: What is the Delinquency and Default stage?
Travis Jones, Rush Properties: At this stage when the homeowner still owns the property but is aware that there is potential for foreclosure. The homeowner is basically warned by the lender that he or she is in default and needs to act, says Travis Jones of of Rush Properties. At this point the homeowner can sell the property. This is considered a grace period before the lender files a lawsuit. The length of the grace period varies by state. The best way to find a property in this stage is through a real estate agent or an attorney.
Q: What options does the homeowner have at this point?
Travis Jones, Rush Properties: The homeowner can sell the property or work out a payment plan with the mortgage company. For a buyer, it’s best to find a property at this stage through a real estate agent or an attorney.
Q: What happens in the foreclosure suit stage?
Travis Jones, Rush Properties: The best way to find a property in foreclosure is through the County Clerk’s office. Title insurance companies can also be helpful. According to Travis Jones and Rush Properties, the foreclosure process varies from state to state, depending on whether it is a judicial or nonjudicial foreclosure. After this phase, the trying to obtain a judgment and receive a order to be sold at an auction. Publicized foreclosure auctions can be researched online, usually listed on websites dedicated to foreclosures. Typically, the auctions take place at a county courthouse, says Travis Jones and Rush Properties.
Q: Can you explain the Judgment and Sheriff Sale phase?
The best way to find a property in foreclosure is through the County Clerk’s office. Title insurance companies can also be helpful. According to Travis Jones and Rush Properties, the foreclosure process varies from state to state, depending on whether it is a judicial or nonjudicial foreclosure. After this phase, the trying to obtain a judgment and receive a order to be sold at an auction. Publicized foreclosure auctions can be researched online, usually listed on websites dedicated to foreclosures. Typically, the auctions take place at a county courthouse, says Travis Jones and Rush Properties.
Q: What happens, post-foreclosure?
Travis Jones, Rush Properties: At this stage, the lender is in control of the property. The home is now in the lender’s Real Estate Owned department, which may be willing to negotiate. However, the price may be at market value based on the condition on of the property.
Travis Jones, Rush Properties former President, is a partner in Cherry Park Properties. He is married and has three children. When not working, Travis Jones of Rush Properties likes to spend time with his family, work in his yard and spend time on the water.