When a homeowner fails to make the payment on his/her mortgage, the lender can begin foreclosure proceedings. This is a very specific legal process with set timelines and outcomes. In a short sale, the homeowner’s name is still on the title of the property and they are the official owners who are trying to sell the property. In a foreclosure, the lender takes possession of the house and as a result, the homeowner is no longer a party in the sale.
Foreclosures on the other hand are not sold by Realtors but instead auctioned off at Trustee Sales in the county of where the property resides. The property must be paid in full, with a cashiers check at the time of the auction. Only seasoned investors should consider this option. When a home is purchased from a Trustee Sale, you could be at risk of various problems that are normally investigated by Realtors and Title Professionals in normal sales transactions. These problems could be serious. Problems could include: Title problems, superior loan payoffs, IRS liens, tenants or owners still occupy the proepty and/or structural problems.
The price may seem good at auction (price well below the surrounding homes) but the costs and risks could haunt you after you try to take title.