Mat-Su Foreclosures, The Good, The Bad, and the Ugly

Some areas of the country are seeing a lot of foreclosures.  Generally, the places that had the fastest increase in prices are seeing the most homes go into foreclosure.  Wasilla and Palmer currently have more foreclosures than we have seen in about 10 years or so, but it isn’t anything like Las Vegas, Pheonix or Southern California.

Often, people ask about buying foreclosures with the unspoken assumption that a better deal might be found there.  There actually are some opportunities here for a savvy buyer, but there are also some mine fields that can blow you apart if you aren’t careful.

There are three different points where foreclosures come on the market.  The pre-foreclosure, the foreclosure auction, and the bank-owned foreclosure

This article will focus on the pre-foreclosure.  I will discuss the other purchase points in future posts.

The pre-foreclosure begins when the home owner drops far enough behind in payments that the lender begins foreclosure proceedings. Often, the owner finds a way to bring the payments current so that they can forestall the foreclosure.  However, if the owner cannot bring the payments current it is just a matter of time before the house will be auctioned at the court house steps.  The period before that is the pre-foreclosure period.

An owner who decides to try to sell their home before the bank takes it is a very motivated seller.  They know they are not only going to lose the home, they will also have very damaged credit if the lender takes it.

You can find lists of these foreclosures in local newspapers.  The Alaska Journal of Commerce legal section has the most extensive list.  The legal notice gives the owners name and the legal address of the property.

Usually these homes will be listed with a Realtor.  The listing advertisement may or may not mention that the house is in foreclosure. The problem is that more often than not, there is more owed on the property than it is worth.  That is where a short sale comes in.  Sometimes the lender will accept an offer for less than the amount owed to save them the hassle of taking possession and selling it themselves.

Normally, the home will not be in very good shape, and the owner will not be able to make any repairs.  If repairs must be made to bring the home up to financing condition, you may have to foot the bill yourself.  Making repairs on someone elses home before you purchase it is always a risky proposition. 

If you are looking fore a motivated seller, here they are.  But just because the seller is motivated does not mean that you will get a great price.  Negotiating with the seller is one thing, but usually the bank is involved as well.  Negotiating with a bank is like boxing with Mike Tyson, they know what they are doing.