Foreclosures have become a common occurrence in the US over the past years. Due to increased default loan payers, there has been a drastic rise in foreclosed listings. People who fail to repay the loan amount or installments lose their property ownership that eventually falls into the foreclosed category. Banks or financial institutions that lent money have the legal rights to put the loan collateral i.e. property on sale to recover the pending loan amount. Before we dive into the different stages of Dallas foreclosures, let’s first understand what does foreclosure means.
Foreclosure is a process in which the bank sells the property in an attempt to recover the default loan amount that the borrower failed to repay in time. While borrowing the money, the person enters into an agreement with the bank stating that the bank can acquire the property if he/she fails to repay the loan amount within the specified time. On failure of repayment, the bank decides to sell the property by pushing it to the Dallas foreclosures list.
Foreclosed properties have gained immense popularity in recent times prompting many potential buyers to invest in them. Being a legal and genuine sale process, many investors are inclined towards Dallas foreclosure properties. There are many advantages of buying and investing in foreclosed properties. Buying real estate properties in metropolis cities like Dallas can be way beyond your budget. However, by means of foreclosed properties, you can think of buying a property that fits your budget.
Foreclosed properties are sold at lower prices due to the unfortunate circumstances surrounding it. Whether you are selling the property for repaying the loan amount or the bank is selling it for recovering the remaining loan installment, they need urgent money and therefore settle for a minimum market value of the property.
If you are interested in investing or buying foreclosed properties, here are the three broad stages that you must know about before initiating the purchasing process.
In this stage, the actual foreclosure has not started yet. The bank sends over a legal notice to the homeowner regarding the failure of loan installment payments over a continued period of time. This is a warning given by the bank to alert the loan payer that the property may be acquired soon if dues are not cleared. On receiving such legal notice, the property owner then decides to sell their property on an urgent basis.
The properties sold during this period do not fall under the foreclosed properties as it is sold by the original homeowner and not the bank. There are various advantages of buying the property during this stage as the seller is in dire need of money and is probable to settle on most of your dictated terms. You can make a profitable deal along with a quick property transfer.
This is the stage where the real foreclosure process begins. On failure of loan repayment, the bank acquires ownership of the property and puts it in the market for sale. The auction bidding starts at the minimum rate that is equivalent to the remaining mortgage value. Since the bank cannot make a profit by selling the property, it aims to sell it as quickly as possible to retrieve the loan balance amount.
There are various advantages of buying properties in this auction phase as you get genuine deals at low prices. Since the property is for sale by an authorized institution, you do not have to worry about fraud and illegality aspects. You can get legitimate property ownership with no outstanding dues or legal issues.
This stage follows only when the property remains unsold during the auction period. If the bank doesn’t find a suitable buyer for the property, they can own the property or sell it in the real estate market. Buying such properties during the post-foreclosure phase can get you winning deals as the property is priced at a competitively lower price and allows regular ways of payment and financing facilities. Also, being a bank-owned property the authenticity and legality of the property are assured.
Buying foreclosed properties can be highly profitable if you have sufficient knowledge about the foreclosure process. Although foreclosed properties are available at low prices, identifying the right property deals in the ideal stage is crucial. Therefore, you should always assess and understand factors like foreclosure reason, property condition, foreclosure stage, etc. before buying.