What is the meaning of foreclosed property ?Is it a good idea to buy fore closed property? It may have high discount .

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Srinivas , Chennai

4th December 2014

Real estate News in Chennai

home loan

residential property

foreclosure

residential property

home loan & loan against property

tax avoidance

legal advice

tax benefits

high discount

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Replies (1)

Hi Mr Srinivas,
Foreclosed houses are the houses auctioned by banks to recover the loans that buyers fail to repay and, hence, the cut in prices. Such properties are cheaper by 10-25 per cent of their prevailing market value. Those houses are called foreclosed property. There are many definitions for foreclosed property.

Kiran Kumar, Chennai

4th December 2014

Comment

Hi Srinivas,
According me, another definition of foreclosed property is a situation in which a homeowner is unable to make full principal and interest payments on his/her mortgage, which allows the lender to seize the property, evict the homeowner and sell the home, as stipulated in the mortgage contract.

S Subramanium, Chennai

4th December 2014

Hi,
A foreclosed home is one in which the owner is unable to make his mortgage loan payments and the bank repossessed the home. These homes are usually not for sale until the entire foreclosure process is complete and the bank lists the home in the local Multiple Listing Service (MLS.) The foreclosure process involves three stages such as pre-foreclosure, auction & bank owned.

P Viswanathan, Chennai

4th December 2014

According to me Pre-foreclosure means, the bank filed a notice of default saying that the owner has fallen two months behind on the mortgage payments. At this point, the owner still has two to three months to try and refinance the loan or attempt to sell the home as a short sale.

Sudhakar , Chennai

4th December 2014

As per my knowledge, auction means the owners can't make the mortgage payments and the bank schedules an auction to sell the home "as-is" (meaning what you see is what you get) to the highest bidder. If the owner comes up with money at the last minute to begin making the mortgage payments, the bank will cancel the auction.

Uday kumar, Chennai

4th December 2014

In my point of view, Bank Owned property means, the home failed to sell at an auction, and the lien holders of the home are paid off through private mortgage insurance or end up taking a loss on the investment. These homes are also known as REOs (real estate owned). The bank with the primary mortgage on the home is now the owner and will usually list the home with a real estate agent in the local MLS.

sharath, Chennai

4th December 2014

Hi Srinivas,
Banks advertise the auction in local newspapers, inviting bids for the property. Distressed property websites, such as Foreclosure.com, NPAsource.com and BankDRT.com, list the details of the property, price, auctioneering bank and date of auction on their websites. Some, NPAsource, for instance, even conduct online auctions. Once you get the preliminary information about an auction, you can visit the property along with the foreclosing bank's official.

Rama Naidu, Chennai

5th December 2014

Hi Mr Srinivas,
To participate in the auction, you need to submit an application and KYC (know your customer) documents, along with the bid value and Earnest Money Deposit (EMD), usually 5 -10 per cent of the reserve price, to the bank. The bank opens the bids on the date of auction and the highest bidder is declared the winner. In the case of an online auction, bidding takes place on the day of auction. If you win the bid, you have to pay the bank 25 per cent (including EMD) of the bid amount within 24 hours.

Gaurav, Chennai

5th December 2014

Hi ,
As per my knowledge, the remaining 75 per cent has to be paid within 15-30 days, depending on the bank. You can apply for a home loan with a bank, including the one that has auctioned the property, to pay the remaining sum. Before you do so, keep the following points in mind.

Tilak, Chennai

5th December 2014

@ Srinivas,
The first step of property inspection is to check the property since you wouldn't want to get stuck with one that is not in a good condition or in a neighborhood that is not suitable for you . In fact, online consumer sites host several complaints from people who have bought properties auctioned by banks. Hence, it's important to exercise due diligence. Buyers should find out the property's age, the quality of construction, unit quality, layout, etc, So, it will be useful to engage a broker to ascertain the right price before bidding for a property.

Sudeep Savanth, Chennai

6th December 2014

Hi ,
Paperwork Customers assume that the documentation and valuation of the property being auctioned will be in proper shape since the bank gave a loan on it. However, banks may not always know about pending dues or frauds. Do not make assumptions just because it's a bank auction property.

Priya Sharma, Chennai

7th December 2014

Hi Mr Srinivas,
There are often disputes on such properties and it is important that you get a legal adviser to exercise due diligence. The bidder gets the property on as is basis. If there are pending dues, the buyer is legally expected to settle them. These could include property tax, electricity bill, water tax, society maintenance charges, etc. Hence, it's best to conduct the necessary research before participating in the auctioning process.

Kushal, Chennai

7th December 2014