Overview

In New York, the primary method of mortgage foreclosure is judicial. Because of this, it could take four (4) months or more from the time a property owner receives a notice of default until the property is sold at a public foreclosure auction sale. Accordingly, don’t wait until the property becomes Real Estate Owned (REO) after the auction because the property will cost more than it would in preforeclosure.

A deficiency judgment is available to a lender if a property in foreclosure is sold at a public foreclosure auction sale for less than the loan amount that the underlying mortgage secures. In fact, a lender must seek a deficiency judgment within 90 days after a confirmed foreclosure sale.

As you search foreclosure.com, please always remember one important item: It is absolutely critical that you learn as much as you can about the foreclosure laws that govern the state in which the property is located. There are many nuances and complicated steps that you must understand before making a bid at a public foreclosure auction sale.

Case in point, several states allow a homeowner/borrower to reclaim his or her property through right of redemption. Post-foreclosure right of redemption, however, does not currently exist in New York.

But, as you can see, overlooking a detail like this could cause a major problem. That’s the reason most prospective homebuyers in the foreclosure industry prefer to purchase a property during the preforeclosure period.

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PREFORECLOSURE

As is often the case, the best time to purchase property in New York is during the preforeclosure period. Most properties are bought during this time, which is the reason foreclosure.com offers its subscribers the nation's largest and most accurate preforeclosure listing inventory on the Internet.

If you wait until the public foreclosure auction sale - or afterwards - the competition may be stronger and the prices will be higher to cover the lender's legal costs.

Basic steps for you to consider during the preforeclosure purchase process:

Contact the Homeowner or Selling Representative

There are several ways to go about purchasing a preforeclosure that you find on Foreclosure.com.

• Contact the owner directly. As a Foreclosure.com subscriber, you have easy 24/7 access to the owner's contact information, which is provided on the "Details" screen of the preforeclosure property. Ask the owner directly in a friendly way for an appointment to view the property and to discuss potentially buying it. Anyone undergoing financial difficulty may not be inclined to speak with you directly and we encourage you to make initial contact in a minimally invasive manner. You can do this several different ways such as by sending a card or letter, making a telephone call, or by a personal visit at a time when the owners are likely to be at home.
• Contact a broker or agent. Foreclosure.com has searched for the best experts in your local area to assist you with purchasing preforeclosure real estate. These experts are highlighted on the "Details" screen via their vCard (Virtual Business Card). If you need assistance, these are the best brokers who understand the unique foreclosure market.
• Contact the listing agent. If the property is listed with a real estate agent, the listing agent should thoroughly understand the seller's situation and may even discount the brokerage commission to assist with a quick sale if there is no cooperating broker with whom to split the fee.*

*Note: All commission fees are negotiable, but providing fair compensation is the best policy to preserve future business opportunities, based upon the effort and expertise the agent(s) has contributed to the success of the transaction.

Inspect the Property

• If the broker/homeowner is receptive, you should schedule a mutually convenient time to visit the property. Once there, carefully examine the entire property, and take pictures for your file - provided the homeowner doesn't object. You should also prepare a checklist to take important notes throughout the tour.
• If you've found your ideal property, work with the broker/owner to schedule independent professional inspections. Even though the home may look like it's in fine condition, hidden defects may lurk beneath the surface or between walls. From the electrician to the exterminator, these inspections are critical because they will ultimately save you money.

Make an Offer

• If the inspections go well, and you are satisfied with the information you have gathered, you can prepare to make an offer. To do this, you will need current standard contract of sale forms, which you can get from most real estate brokers and attorneys. You may also be able to download and print state promulgated forms if they are available on the Web site of the real estate regulatory commission in the state in which the property is located. When preparing contracts it is always advisable to have an attorney represent you.
• It's important to clearly explain the terms of your offer to the homeowner and/or the real estate agent. If you are unable to do this in person, write a cover letter that briefly explains to the homeowner the most important points of your offer, especially why it is in his or her best interest to accept it.
• Early in preforeclosure, when the homeowner may feel there is time to market the house for sale, your offer may be ideal because you have the financing already arranged. Or, because you are not making an offer contingent upon further inspections and repairs. If the preforeclosure time is running out and loss of the property through foreclosure is imminent, the biggest advantage is that you can close quickly and - to some extent - preserve the owner's credit rating.


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FORECLOSURE

Many New York properties are bought at public foreclosure auction sales, but the competition may be strong and the prices are higher than during preforeclosure to cover the lender's legal costs. At this point, it is unlikely that the homeowner will be able to avoid foreclosure. Therefore, the property will be auctioned to the highest bidder, including the lender.

By law, foreclosure auction sale must be announced publicly and held at the date, time and place required by state statutes. To find these sales, read newspaper notices prior to the auction date, look for public notice posted - when required - on the property, or search other public places in the county where the real estate is located.

Basic steps for you to consider when purchasing a property at a public foreclosure auction sale:

Contact the Lender's Representative

• Contact the trustee, lender's attorney, public trustee, or sheriff and ask what is required to purchase the property at the auction. Traditionally, an earnest money deposit amount in the form of a cashier's check or money order is acceptable.
• Ask for a copy of the purchase agreement, or contract of sale document, that you will need to complete if you are the winning bidder. Have your attorney review it carefully and negotiate any changes in advance, if necessary. Be aware that the seller, as represented by an attorney, trustee or other official, may not be open to making many substantive changes - if any at all.
• Make arrangements to view and inspect the property if it is vacant. Even if it is still occupied, the attorney, trustee, or the realtor if it has been listed for sale, may be able to gain access for you. Realize that the owners may not be very cooperative.

Inspect the Property

• Once there, carefully examine the entire property, and take pictures for your file - provided the homeowner doesn't object. You should also prepare a checklist to take notes throughout the tour.
• If you've found your ideal property, work with the broker/owner to schedule independent professional inspections. Even though the home may look like it's in fine condition, hidden defects may lurk beneath the surface or between walls. From the electrician to the exterminator, these inspections are critical because they will ultimately save you money.

Always remember, you are buying the property strictly "as is" at an auction sale!

Bid on the Property at the Auction

• On the day of the public foreclosure auction sale, meet the lender's representative at the courthouse and show him or her the earnest money deposit and an acceptable form of identification.
• Have your top bid worked out in your mind in advance. When bidding starts, be aware of your competition and increase your bid to exceed theirs by the increment set in advance (usually $100 to $1,000, depending on the value of the property).
• When you have won the bid, complete the transaction per the direction of the lender's representative by signing the purchase agreement and submitting the deposit.

At this point, your earnest money deposit is non-refundable.

• Be prepared to close within the required time period, which is usually only 30 days.


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