Dear Michael: On a foreclosed house, is the down payment negotiable with the bank? We are interested in a house but don’t want to be outbid by another buyer.
Answer: The type of loan that you obtain from the lender will determine how much money you have to put down on any particular property. You will need an earnest money deposit at the time you put in an offer on a property. The amount can be determined by you and your real estate agent but, more often, adds up to 3% of the purchase price.
There are many loan programs and only a lender would be best able to help you find the best loan program for you. If you need a good lender to talk with, please let me know and I can get you additional information. Interview three lenders before making a decision. With a good lender and a good real estate agent, you should be able to find the home you love.
Dear Michael: The home that we have been renting for three years is in foreclosure. The trustee sale is scheduled for the end of the month. What should we expect?
Answer: Trustee’s sales open up opportunity to buy homes at the courthouse for below market values. However, this comes with a heavy price of paying all cash. This one provision will rule out most buyers and investors from being able to purchase a home at or under market value at a trustee’s sale. The only acceptable bids at a trustee’s sale, except for the foreclosing beneficiary’s opening bid, are those that can be immediately paid in full by the bidder with cash or cashier’s check. Therefore, bidders must individually qualify with the auctioneer before the sale. This is done by showing proof of the total amount of money each bidder brought to bid at the sale to the auctioneer. Bidders are not allowed to bid more than the amount of cash they actually brought to the sale. The bidding is done vocally by the bidders themselves. Whoever has the highest bid receives the home.
When the auction is finished and if the bank buys it, it will usually send its Realtor to negotiate a cash-for-keys with you. It will agree to give you some money to help you relocate to a different property and you will agree to leave the house in broom-swept condition. They usually give you anywhere from two to four weeks but this can be negotiated. Banks realize you need help to move and they are not interested in throwing you out in the street the same day they buy the house at auction, but it’s the bank’s asset and it will need to take possession of it.
Because trustee’s sales make no title reports available to bidders on upcoming foreclosures, it is a case of buyer beware. Bidders are well-advised to do a thorough title search at the county recorder’s office or a local title company before bidding on any foreclosure.
All sales are final and there are no grounds for rescinding a valid trustee’s sale. The home also comes without warranties of any kind (neither expressed nor implied) concerning the property or the state of its title. This is due to the trustee’s limited or no prior direct experience with the actual history of the property itself. The majority of trustee’s sales in California end up going back to the beneficiary, where they then assign the property to an asset management company, which in turn assigns it to a local real estate agent to sell.
Dear Michael: How can I get out of owning a time-share? We can’t afford making the payments on it and we have to prioritize our monthly bills.
Answer: By “get out,” I assume you mean you no longer want to own it? If that is the case, you will need to sell it. If there is a loan on it, you will either need to sell if for more than you owe or bring the difference in price to the closing to fully pay off the lender.
Your first step should be to talk to the management at the location. They will likely have a recent list of sales, prices and, potentially, the brokers who assisted in the sale. Find out what is involved in transferring the deed (if deeded) to another person. Often, there is a transfer fee. You do not generally have to use the broker; you can market and arrange for sale on your own if you prefer.
If you are selling, make sure that the resort does not have a first right of refusal or a right to buy your unit before anyone else. If you cannot make your payments and cannot sell the unit, contact the lender to see if hardship payment arrangements can be made. Ask if it would be possible for a new owner to assume your debt without penalty if you could find a willing party.
Contact the resort to see if there is a way to make payments on your dues. Like being unable to fulfill any obligation, though, this method may have a derogatory effect on your credit. If you simply stop paying, a deeded unit will likely fall into foreclosure, which is much worse than the workout above for your credit. The unit will be repossessed or reseeded, often to the resort, and you may be held liable for their losses in court or otherwise.
Michael Kayem is a Realtor with Re/max/Execs, serving Culver City and the Westside since 2001. Contact him at (310) 390-3337 or homes@agentmichael.com.
