| Foreclosure home sale Properties go into distress when mortgage payments are way over due. The banks in order to protect themselves will foreclose on the property; it will try to auction it off to recover the portion of loan outstanding and in arrears. By law they are require to give notice (known as the proclamation of sale) in the press before the property is auctioned off. The notice consist of the name of the borrower, the address of the property, brief description of the property, the name of the repossessing bank, name of the lawyer and auctioneer, date, time and place of the auction. It is sold as "it is" condition and may consist of sitting tenants. There is no guarantee of vacant possession and unencumbered title. It can be found in the following sources: 1. Auction notice in the newspaper 2. Auction notice at the courthouse 3. Banks and lawyer's office 4. Auctioneer 5. Internet Participating in an auction 1. Tenderer have to register name with the court's registrar on that day; proof of identity is required. 2. A bank draft for 10% of the reserve price is handed to the registrar and a receipt is issued for the bank draft. 3. The assistant registrar will call the names of the bidders to enter the room for the bid. 4. If a bid is successful, the full ten percent of the bid price must be paid less the 10% reserve money paid. 5. The court will allow the bidder ninety days ( subjective) to arrange financing. Due diligence to be conducted by the bidder 1. Physical inspection of the property internally if possible; contact the auctioneer for the valuation report, etc. 2. Title search in the land office (Master titles or separate titles) to check for any caveats (easements) or restriction -in- interest ( the state may restrict sale of land, transfer, leased or dealt in any manner without the consent of the state authority). Future developments such as roads and sewerage should be checked; road lines etc. 3. Check for any arrears in assessment tax and quit rent with the local council and land office. 4. Estimate the cost of repairs to make it marketable. 5. Subtract the cost of repairs, legal fees, stamp duty and the discount below market value in which we are willing to pay for it. 6. As a rule of thumb a 20 -25 % discount off market value should be the norm. Refinancing of property after completion of sale As the property is bought at below market value, the property can be revalued and refinance after all the necessary repair and work have been done . Any excess (assuming 25%) above the auctioned price is gain to the buyer and the equity can be used to refinance the property. Assuming a 30/70 equity to debt ratio is obtain; the bidder effectively pays a 5% differential between the revalued and finance amount ( Legal, stamp duty not included). __________________________________________________ Buying foreclosure properties and enhancing it's value and much more, learn from an expert of 11 years experience. (applicable in UK, USA, Australia & many other countries) Here's just a small sample of what you'll discover...
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