Frequently I’m asked if I (or another real estate licensee or agent) can help a consumer to purchase a foreclosure. There are some nuances to this answer, but in short, it depends.
There are several stages in the foreclosure related sales in California. Often, homes somewhere in this quagmire are listed on our Silicon Valley area MLS or multiple listing service. If a property is listed in the MLS, then yes, we Realtors can help home buyers with a distressed sale purchase.
- Pre-foreclosure (where payments have been missed and a Notice of Default or NOD has been filed – often, but not always, these homes are on the market and included in the MLS. If they’re in the MLS, I can help. Often these are short sales (but short sales are not always in pre-foreclosure – they may not have missed any payments).
- Trustee’s sale, or actual foreclosure on the courthouse steps. No role for a real estate agent here. There are some big caveats and warnings! First, often what’s owed against the home is more than it’s worth and the only way to purchase a home here is to pay off all the debts (so it may not be much of a deal!). Second, if you buy here, you get NO inspection contingency and must pay cash for the house. End of story – no backing out. Worse, you cannot inspect it ahead of time!
- Bank owned or REO. These are usually listed on the MLS and if so, I can help you with it. Sometimes banks hold onto them between the trustee’s sale and prior to listing them with a broker. Often this is only for a month or two but sometimes it’s longer. If it’s not on the MLS, it’s very very hard, or maybe impossible, to buy it.
While it’s not hard to locate homes where owners have missed some payments, it should not be assumed that these houses are either for sale or that the owners have any intention of selling them. In my opinion, it would be harassment if consumers showed up on their doorsteps trying to purchase a house where a payment has been missed. Most, maybe all, of the residents there would be offended. They may be trying to get a loan modification (a friend of mine got one approved last week!) or have family & friends helping them to get back on track. If it is not listed in the MLS (which you can find at www.MLSListings.com – the public portal of our agent multiple listing service), the odds are overwhelmingly against it being available to you.