As you’re trying to decide whether purchasing a foreclosed home is the right choice for you, make sure you understand the foreclosure laws that exist specifically for the state of California. If you decide to wait out the home and make a bid once it goes up for public auction, make sure you know the long list of potentially complicated steps you have to go through to officially become the property owner. Through the right of redemption, California allows homeowners to reclaim their property for certain situations. Due to this complex possibility, many people choose to purchase a property during its pre-foreclosure period.
During this time, the lender has not taken full possession of the property yet so the ownership still lies within the hands of the original owner. The pre-foreclosure period is a great time for most prospective homebuyers to purchase this discounted property. Short sales can also occur on these homes when an agreement is made between the prospective buyer and the lender who will allow them to purchase the home at a price that is below the debt owed value.
Waiting any longer than the pre-foreclosure period will allow a larger number of other prospective buyers the opportunity to place their bids on the home as well at the public foreclosure auction. To purchase the foreclosed homes, you can complete any of the following methods to initiate contact with people connected to the property:
The competition is usually really intense when people are trying to buy a foreclosed home at a public auction. Additionally, the prices are usually higher during this stage of the foreclosure to cover the legal costs accrued by the lender. At this point, the homeowner will most likely not be able to avoid the foreclosure of their home and the property will be given to the highest bidder.
California state statutes determine the time, date, and location of these auctions that must also be announced to the public in newspaper notices before they can legally occur. If you would like to try your hand at purchasing a home at a public foreclosure auction sale, follow the guide below:
An auction sale requires you to buy the home “as is” so you must take the necessary steps before the auction to make sure you have a skilled real estate agent that will ensure you’re getting good value out of the price you’re agreeing to pay!
The two ways a residential property is foreclosed in California is through a nonjudicial or judicial foreclosure. If a home is involved in a nonjudicial foreclosure, the former homeowner will not be able to redeem their property. A judicial foreclosure is the exact opposite situation.
For a judicial foreclosure, there are specific criteria that must be met for the former homeowner to have the right to redeem their property. These stipulations are further explained in the information below. The former homeowner can redeem their property if:
If there truly is a deficiency on the property, the lender can choose to waive the right of the former homeowner to have a “deficiency judgment”. The laws set in place by California can also cause the prohibition of a deficiency judgment. In both scenarios, the former homeowners will not be allowed to have a redemption period or claim the “right to redeem” their old home. This means the current homeowner is in the clear and they will be able to keep their new home!
The new law titled “SB 1079” was created to make it easier for prospective home buyers to purchase one to four-unit homes that are sold at public foreclosure auctions. Investors have a great chance to make a profit from this new arrangement. The new law provides a necessary modification to the old foreclosure procedures that used to allow larger corporations to make bulk-purchases on numerous different homes in the span of a single auction without giving tenants the opportunity to purchase the property.
SB 1079 allows tenants, owner-occupants, nonprofits, and local governments a much more equal opportunity to purchase homes at auction. This provides the chance for investors to retain the ownership of their owner-occupied homes. Additionally, this persuades larger corporations to stray away from these bulk-purchase ideals given the new law enforces much higher fines than ever before. This level playing field is the open-door new investors need in order to purchase foreclosed homes at a low price and then utilize the help of their real estate agent / broker to perform the necessary renovations that will make the property sell quickly to a prospective buyer.