Myth #1:  You should move as soon as possible once foreclosure proceedings start otherwise you will be forcibly thrown out on the street.

Truth: Foreclosure proceedings can take several months from the time that the first notice of default is sent and the time your home is put up for sale at the public auction.  The new owner then must follow the state legal procedures to evict you, which will require at least some notice (from 3 to 30 days) and a court order.

Myth #2: When facing a foreclosure, the best option is to do a short sale.

Truth: A short sale occurs if you can convince the lender to sell the property for less than what is owed.  A short sale will only be granted is the case of hardship has been made.  Part of the problem with short sales, is upon the close of escrow, you will give up the opportunity to live in the house for many months, payment free.

Myth #3: If your home is being foreclosed upon, there is no reason to file for bankruptcy.

Truth: If you plan on staying in your home payment-free as long as possible, then a bankruptcy could delay the foreclosure auction.  Talk with an attorney.

Myth #4: Your home won’t be sold in foreclosure while you are negotiating with the bank.

Truth: Once the foreclosure proceedings begin, negotiations with your lender must be successful prior to the date set for the foreclosure sale.  Lenders often state right up until the date of a scheduled foreclosure sale that the negotiations are on track and then pull out at the last moment.  It may be a result of disorganization.

Previous prices may not keep you out of buying a San Diego foreclosure property as the number of San Diego foreclosure homes has increased immensely.

Foreclosure properties will come in 3 types:

1. San Diego Pre-Foreclosure Properties
2. San Diego Foreclosure Auction Properties
3. San Diego Bank Owned or San Diego Real Estate Owned (REO) Properties

San Diego Pre-Foreclosure properties are properties that the buyers have defaulted on their loan. A Notice of Default is currently being executed. Generally, borrowers have 90 days from the date of the Notice of Default to either bring payments up-to-date or arrange for a loan work out. Otherwise, the property is scheduled for Foreclosure Auction.

The advantages of purchasing a San Diego Pre-Foreclosure home are:
1. You can generally inspect the property.
2. You have the option of obtaining financing rather than pay all cash.
3. You can obtain title insurance.
4. There is generally no eviction required.
5. The overall risk is low.

The disadvantages of buying a San Diego Pre-Foreclosure property are:

1. It may take some time to locate the contact information of the Seller.
2. Not all Pre-Foreclosure owners want to sell. Thus, you may waste a lot of time trying to find a seller.
3. The seller may ask for an unreasonable price.
4. Generally, there are no real estate agents to guide you through the buying process.

Many of these San Diego pre-foreclosure homes are listed for sale on the San Diego Multiple Listing Service (MLS). All of these properties have asking prices and have real estate agents representing the seller. You may view the complete list of San Diego homes for sale at www.mlsofsandiego.com

San Diego Foreclosure Auction Properties

San Diego foreclosure auction properties are generally sold at the court steps in downtown San Diego in an informal setting. Be prepared to bring cashiers checks totaling the bid and realize that all sales are final.

The advantages of purchasing a San Diego Foreclosure Auction home are:

1. The amount of people bidding is limited because you need to pay cash at the auction using cashiers checks.
2. Less potential pool of qualified buyers leads to more of an inefficient marketplace. Therefore there is a potential for great price savings.
3. Some banks are now pricing their minimum bids below the amount they are owed.
4. All junior liens are wiped out by the foreclosure hence a 2nd Trust Deed is eliminated if the 1st Trust is foreclosing.

The disadvantages of buying a San Diego Foreclosure Auction property are:

1. You cannot inspect the property prior to purchase. You are buying the property in “as is” condition.
2. You have to pay cash (cashier’s checks) for the entire purchase at the auction.
3. You cannot obtain title insurance and the ownership is subject to other superior liens
4. A costly eviction may be in order which costs both time and money.
5. The overall risk is high but there is opportunity for a good deal.
San Diego Bank Owned Foreclosure Property or San Diego REO Property

The advantages of purchasing a San Diego Bank Owned Foreclosure Property home are:

1. You can generally inspect the property.
2. You have the option of obtaining financing instead of paying all cash.
3. You can obtain title insurance.
4. There is generally no eviction required.
5. The Banks are very motivated to sell the property. The lenders price San Diego foreclosed homes to sell as the bank does not have the emotional attachment like other sellers.
6. The overall risk is low and the savings potential is high.

The disadvantages of purchasing a San Diego REO home are:

1. The response time from Banks may be slow due to their busy volume.
2. The banks generally have more restrictive due diligence periods to inspect the property the inspection period of ten days is more likely than the customary 17 days.
3. The banks usually have their own purchase contract their contract is generally less advantageous to the buyer than the standard Realtor purchase contract.

Most other advertised foreclosure lists only show pre-foreclosure property as they do not have access to the San Diego Multiple Listing Service (MLS) and they change to access the data. Depending on risk tolerance, buying a San Diego Foreclosure property can yield some great financial advantages.