What You Don't Want To Catch At A Foreclosure Sale
I get asked about foreclosures every week, and much of it has to do with the confusion on how the industry works.
This confusion leads people to use the same term for different things.
Like the word foreclosure.
It’s used as a “catch all” term for a property in any stage of default.
So when you hear the word “foreclosure sale” most people do not discern that from a sale of a “bank owned” home. And the difference is huge.
A foreclosure sale typically happens at the courthouse or other public place. It is an auction to the highest bidder with a reserve. If the reserve is not met, the bank managing the foreclosure makes a bid at the reserve price and becomes the new owner.
This is when the property changes from a foreclosure to a bank-owned home.
Here’s what you are buying at a bank foreclosure sale in Tennessee:
- The title is not guaranteed to be clear and likely has liens or defects
- You are expected to pay cash for the property upon conclusion of the auction
- There is no opportunity to inspect the property or see the interior prior to the auction
- You are 100% responsible for any occupancy of the property
This is what you can expect with a bank-owned home sale in Tennessee:
- The title should be clear and insurable
- Closing and financing options are typical of a traditional real estate transaction
- Unless it is sold occupied, you should be able to inspect the property and view the interior
- Unless you agree to be responsible, the bank remedies any occupancy issues with the home
The reason for the lack of Bank-Owned homes on the market in Nashville has to do with the lack of homes available for sale.
These homes are being bought at the foreclosure sale by third parties or are being remedied by the homeowner prior to the sale. With most homes having positive equity, it’s easier to stop a foreclosure sale now.
Look at the sales listed on this page.
This page contains many of the foreclosure sales scheduled for Nashville.
Now scroll down further and see how many have been cancelled and sold recently.
Of the twenty-two sales listed on this page, twenty-one are foreclosure sales and one is a bank-owned sale scheduled for the next two months. Also note there are twenty-three recently cancelled sales listed and only three third-party sales.
So you can see that most of these foreclosure sales are not becoming bank-owned homes. In the past up to +50% of them would end up in the bank’s inventory.
This makes finding your dream home or Nashville investment property difficult.
If you are looking for value in this market and want an agent who understands where to find it, then hit reply and let me know what you want in your next home.
The Daily Deal in Nashville is a cape cod home located in popular Inglewood [East Nashville] and listed for less than $320,000.