Buying a foreclosure or short sale in Redondo Beach, or the South Bay, can be a great way of getting a home at a price below market value, but it comes with many challenges. First and foremost in this current real estate market is the lack of inventory. This lack of inventory means that there are more buyers competing for any “distressed” home listed on the MLS and this generally drives prices up to current market value. There are a number of different types of “foreclosures” and each has it’s own challenges and benefits.
If you are a homeowner and considering selling your home as a short sale, or behind in your payments, we are short sale listing specialists and as short sale agents have successfully sold more homes than almost anyone in the South Bay.
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Types of Foreclosure Opportunities
A Short Sale is the sale of a house in which the proceeds fall short of what the owner still owes on the mortgage. Another way to say it is that the property is worth less than what it will cost to sell (paying off all existing liens and closing costs). This is commonly referred to being “upside down.” In order for a short sale to close, the lender must agree to accept less than the outstanding loan balance as full payment.
Bank-Owned (a.k.a. REO):
If the lender takes ownership of the property, either through an agreement with the owner during pre-foreclosure or at the public auction, the lender will usually re-sell the property to recover the unpaid loan amount. The lender will typically clear the title and perform needed maintenance and repair; however, the discount for these REO homes is typically less than a pre-foreclosure or auction property discount.
Pre-Foreclosure: Buying a property in pre-foreclosure involves approaching the borrower/owner and offering to buy the property outright. The borrower/owner can walk away with the equity in the property and avoid a bad mark on his or her credit history. The buyer has time to research the title and condition of the property and can realize discounts well below market value. As the number of foreclosures go up and the number of buyers and realtors pursuing pre-foreclosure goes up, this gets to be more difficult.
How to buy a pre-closure
If the loan is not reinstated by the end of the pre-foreclosure period, potential buyers can bid on the property at a public auction.Buyers often are required to pay in cash at the auction and may not have much time to research the title and condition of the property beforehand; however, a public auction often offers some of the best bargains and avoids the unpredictability of dealing directly with the borrower/owner.