Kinds of Foreclosures
First of all, it is important to understand that foreclosure is a process. The first step is called pre-foreclosure. This means that the mobile home is in default and the bank may or may not foreclose on the mobile home. The second step is a short sale. This is where the owner is trying to sell the mobile home before the bank forecloses, but the market value is a little short of their balance due on the loan. Depending on the bank, they may or may not accept offers less than the balance due at this point. If the owner can get the bank to short sell, it is much better for their credit. The third step is the foreclosure auction. This is when the bank is trying to get the most money for the mobile home in a short amount of time. The fourth step is an REO, which stands for real estate owned. If the mobile home does not sell at auction, the bank then repossesses the mobile home and places it on the market for sale.
Highest and Best
You may have to make a higher bid if other foreclosures are selling fast. This means other people are buying up foreclosures quickly, and if you really want to get in on this action, you may have to start off with an offer that is close to, or at the asking price. If there are multiple offers, you may have to offer higher than the asking price and try to keep the contract contingencies to a minimum if you really want that foreclosure. Remember, location and amenities matter when buying foreclosures in Lafayette, other foreclosures may be selling quickly if they’re in a great spot.
Prepare Yourself for “As-Is”
In most cases, the seller of a foreclosure is a bank, so there is not a traditional seller to make repairs before closing. The bank will not likely fix anything wrong with the mobile home. They are selling it to try to make as much money back on their investment as possible. Make sure you include an inspection contingency so you can hire an inspector if you are making an offer on a foreclosure, that way you will know exactly what you are getting into if the bank accepts your offer.
Funding Your Foreclosure
Most buyers purchase foreclosures in Lafayette with cash because of their frequently “below market” sales price. Cash is also the easiest and fastest closing, so banks often prefer cash buyers. There are a handful of banks that will provide financing for this purchase. They will require an appraisal of the mobile home and this takes time, so if you are up against cash offers, make sure your offer is a competitive one. If the foreclosure doesn’t appraise as high as your offer, you will have to make up the difference.
Buying foreclosures in Lafayette may come with additional costs above and beyond the purchase price and closing costs. If the owner couldn’t make the mortgage payment, you can probably assume he or she did not pay the real estate property taxes or homeowners association fees if the foreclosure is in a community. You might also become responsible for any utility bills, home equity lines of credit, or other liens on the mobile home. Make sure the title company takes these factors into account when preparing the title commitment.
You will also have to take into consideration the additional cost of making the necessary repairs or cleaning when you buy a foreclosure. There is no cleanup requirement when these mobile homes are seized, and the previous owners might be a little upset about the bank foreclosing on them and taking them out on the property. Repairs to the mobile home might also increase the assessed value and raise the taxes.
Call Lafayette Mobile Home Buyer at 337-508-0795 or send us a message to learn more about buying foreclosures in Lafayette.
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