Get the "Upper-Hand" in Buying a Foreclosure Home In Kokomo

A few days ago I had an inquiry from a frustrated buyer wanting to buy a bank owned property just outside of Kokomo. He was interested in a property that he found out about on a Friday and by the time he called on Monday there were already two offers on it.

He wondered how people can get the upper-hand on bank-owned homes and how you can find out about these houses even before they are available to the public.

So, I thought I'd try to give you an idea what the foreclosure process is in Indiana and ways you can find out about these properties before other potential buyers.

First of all, foreclosure is a process, not an event. The process starts when the homeowner does not make payments on the home or is consistently late with their payments and ends with a Sheriff's Sale.

When the loan is considered in default, the lender's attorney can file a foreclosure lawsuit. The lender's attorney files a "lis pendens" which is a notice about the pending foreclosure lawsuit. This document is filed with the clerk of the court and is part of the public records. (I understand that you can go to the court house and check these records; but it's not something I have been inclined to do.)

Once the foreclosure suit is filed, a court date is scheduled and the owner and the lender can present evidence as to why the judge should or should not order the property sold to satisfy the mortgage debt.

Once the judge orders a property sold at a Sheriff's Sale, the sale date is set and it must be advertised to the public. You can find this information in the Kokomo Tribune in the classified section under Public Notices or Legals and on the Howard County Sheriff's Department website under Sheriff Sales. (I'm not sure when they post on the Sheriff's website. As of today, they haven't posted for the October sale yet.)

These Public Notices are perhaps the best place to get the "upper-hand" on other potential buyers! Watch the paper, check the foreclosure lawsuits and if something looks interesting, check it out! By saying check it out, I mean drive by, see if it looks like something you want to consider. You will not be able to see inside! Once the Sheriff's Sale is scheduled, houses that were listed for sale are usually taken off the market.

Now, if you find something you like, you can go to the Sheriff's Sale and bid on the house. If yours is the highest bid, the house will be yours! Be advised; the property is sold "As Is" and you must pay in full by noon the following day! No inspections, no appraisal, no nothing!

Most people don't have the time, the funds or want to take the risk to buy a property at auction. In fact, most properties are bought by the lender to be resold through a REALTOR® in attempt to recoup their funds.

If the lender buys the property, it enters into their "resale system". It can take just a matter of days from the sale date to months for the lender's "resale system" to get the property on the market.

Before I go on and explain how you can get a head-start in buying one of these properties through a REALTOR®, let me explain one little detail about the foreclosure process. The owner of the property can redeem the property at any time prior to the Sheriff's Sale! That means they can pay what they owe or work out a deal with the lender and keep the property. (There are also other actions that can take the property out of the auction, too.)

To get a "jump" on others when these properties are finally listed for sale with a REALTOR® there are three things you must do:

1. You must have your financing lined up. You need to have a pre-approval letter or other proof of funds in order to submit an offer, so take care of this now!
2. You need to be working with a REALTOR® who is watching the listings for you and lets you know as soon as something that meets your needs comes on the market.
3. You need to be ready to act "quickly." The best buys are gone in a flash!

Just a little plug for me…

My office has a large percentage of the repossessions in our area, so I often have an insider's track as to what is coming on the market. I also have excellent relationships with agents in other offices who specialize in foreclosures and they keep me informed when I have a client with particular wants and needs.

And one final note - You are going to find ads in the paper and websites that promise a list of pre- foreclosure and foreclosure properties. Believe me, there is no definitive list of foreclosure homes! The sole purpose of these ads and websites is to get your contact information. Once they have your contact information, most of them "sell" the information to local real estate agents who hope to recruit you as a client. (Be sure to read the Real Estate Internet Warning.)

Happy House Hunting!