Skip to content
×
PRO
Pro Members Get Full Access!
Get off the sidelines and take action in real estate investing with BiggerPockets Pro. Our comprehensive suite of tools and resources minimize mistakes, support informed decisions, and propel you to success.
Advanced networking features
Market and Deal Finder tools
Property analysis calculators
Landlord Command Center
$0
TODAY
$69.00/month when billed monthly.
$32.50/month when billed annually.
7 day free trial. Cancel anytime
Already a Pro Member? Sign in here

Join Over 3 Million Real Estate Investors

Create a free BiggerPockets account to comment, participate, and connect with over 3 million real estate investors.
Use your real name
By signing up, you indicate that you agree to the BiggerPockets Terms & Conditions.
The community here is like my own little personal real estate army that I can depend upon to help me through ANY problems I come across.
Foreclosures
All Forum Categories
Followed Discussions
Followed Categories
Followed People
Followed Locations
Market News & Data
General Info
Real Estate Strategies
Landlording & Rental Properties
Real Estate Professionals
Financial, Tax, & Legal
Real Estate Classifieds
Reviews & Feedback

Updated about 2 years ago,

User Stats

60
Posts
92
Votes
Angela W.
  • Attorney
  • Houston, TX
92
Votes |
60
Posts

Foreclosure for Beginners

Angela W.
  • Attorney
  • Houston, TX
Posted

Foreclosure 101 for Investors

I wrote a few articles on foreclosure. Here is one of them. 

Angela Walter, Texas Attorney - Feel free to message me if you have any legal questions!

Purchasing properties at foreclosure sales can be an opportunity for investors. Some of these properties are offered at a fraction of the market value which is one of the reasons investors are incentivized to buy. Before purchasing a property, there are several steps to consider. Here is a basic overview of the foreclosure process.

TOP 5 DUE DILIGENCE STEPS FOR PRE-FORECLOSURE

There are three types of foreclosures: (1) tax sale, (2) trustee sale, and (3) HOA sale. Tax sales are government lines that usually have superior priority over other liens. Trustee sales are mortgage liens. Usually, these mortgage liens have priority over HOA liens. If the HOA lien is junior to the mortgage lien, it will extinguish at the sale. Mortgage liens are generally junior to government liens, therefore, additional diligence is necessary to ensure that those liens are not on title or that you are accounting for additional costs when purchasing the property. HOA liens are junior to government liens and most mortgage liens. Before purchasing from an HOA sale, you should conduct a title search.

1. TITLE SEARCH = When conducting a title search look for liens, release of liens, any break in chain of title, Lis Pendens and abstract judgments. If you are not familiar with the title search procedure, you should seek a professional with experience. There are many title search companies available that can help you.

2. CONTACT TRUSTEE = Reach out to the trustee of the property. Some trustees may provide an inspection report and let you view the interior of the property. Note that trustees are not obligated to provide such reports or allow you on the property.

3. PHYSICAL CHECK = If you have permission you should physically check the property prior to the sale or have a professional inspector. Account for costs associated with capital expenditures such as the condition of the roof, foundation, and HVAC. Also check to see if the property is in a flood zone and whether there are any environmental contaminants. Be sure to check the neighborhood and surrounding areas. *Be aware that you are not allowed onto the property without permission by an authorized representative or agent.*

4. TENANTS OR OCCUPANTS = Tenants or occupants may be residing on the property even after you purchase the property at a foreclosure sale. The proper procedure to remove tenants or occupants from the property is an eviction proceeding. Otherwise, you can make an arrangement to rent the property to them.

5. FINANCIAL ANALYSIS = Make your own financial analysis for equity. This can be done in several ways. One method is to research the fair market value of the property and surrounding properties to compare that value to the estimated cost of repairs, cost of any liens, and cost of any judicial action needed for eviction.

6. BONUS – OTHER DUE DILIGENCE TO CONSIDER = If there is a wrongful foreclosure action related to this property, it may put you in a legal battle. Wrongful foreclosure claims may prevail when the debtor or owner is an active military member, bankruptcy action is pending, or probate is pending. Check bankruptcy twice, during your due diligence and the day of sale because last minute bankruptcies may be filed.

Angela Walter, Texas Attorney - Feel free to message me if you have any legal questions!

Loading replies...