Financing Question for a Foreclosure

[Corey Petersen]

Hey all,

I'm pretty new to BP and to REI in general. I purchased the house I live in a year ago and now see the light of what real estate can do! So I'm reading and researching a lot, I'll be taking a class at community college, and just trying to get educated. I'm in the Portland, Oregon area and my plan, like many, is to buy and hold for eventual financial independence and retirement.

I'm writing today because I have one specific question. I was speaking with a broker yesterday about a foreclosure house she will be showing me on Friday. When I was asking a few questions, one of the things that came up were the forms of purchase the owner will and won't accept. She said that he would accept cash or a rehab loan, but no VA loans or conventional loans. I didn't ask because I didn't want to sound stupid, but can anyone explain why this would be? Specifically, why wouldn't a conventional loan be acceptable? Doesn't he get payment for the house either way? Hopefully this isn't too dumb of a question, but I'm still learning and this is probably as good as any place to ask.

Thank you in advance!

Corey

[Grace Widdicombe]

Hi @Corey Petersen, 

Great decision, and glad you are reaching out. I wish I had been more connected like you are when I was starting out. 

Foreclosure properties are complex from the very get-go, because, when somebody says "foreclosure" it could be a Pre-Foreclosure, or an after-Foreclosure (which means it should be called an REO), or a true foreclosure - which means it should be called an Auction Sale. So, getting the meaning straight right from the beginning is very important.

If it's a Pre-Foreclosure, and you if find out it's a "Short Sale" then you have to ask; "Is the price approved by the lender?"  Because a "Short Sale" means that they intend to sell it for less than is owed, but more times than not, the lender has not agreed to the price.  And there is no sale, until the lender agrees. 

Come in with this knowledge, and find out why the real estate broker said no VA, and no Conventional. I work a lot of Short Sale negotiations, and "conventional" in my world has a more specific meaning than it does in a lot of other people's world.

Have a great day!

Grace  Widdicombe

President of Northwest REIA - Portland, OR