Looking for a bargain? Check out the foreclosure listings in Utah! You can get a great deal on a property that's been bank-owned. But be careful – not all foreclosures are created equal. Foreclosures can be one of the best ways to get an incredible deal on a piece of utah real estate, whether you plan to live in that property yourself, or you plan to use it for an investment property. Let’s learn more about how to buy foreclosed properties in the state of Utah. WHAT IS A FORECLOSURE A foreclosure is the process where the lien holder takes ownership of a property due to a variety of possible reasons, but usually it's the lack of payment. You don't pay your bills, you get foreclosed on. The foreclosure processes, differs with every state, but in Utah it generally begins with a bunch of notices are given to the property owner and then a legal set of steps, leading up to the actual foreclosure, are carried out. Now there's generally three phases in the foreclosure process where it's possible to buy a property. There's the pre-foreclosure, there's at the courthouse steps at the foreclosure, and then after foreclosure. So when learning how to buy a foreclosure, it's important to know what the three phases are. So let me define each. PRE-FORCLOSURE First, there's the pre-foreclosure phase. It is possible to buy a home before the foreclosure actually happens and the homeowner before they're kicked out. Buying a property during this period is known as the pre-foreclosure and it's a common technique used by a lot of Utah real estate investors and it can be a good way to find motivated sellers. After all, few things in life are more motivating for a homeowner then knowing they're soon going to be physically removed from their property. Hiring a good real estate agent to help you find a Utah Pre-Foreclosure can be very crucial to finding them. COURT HOUSE STEPS Next, there is the actual foreclosure at the courthouse steps. You see in most states, once the legal process has been carried out and the property is sent to the county for a public auction, it's done on the courthouse steps, sometimes figuratively, sometimes actually literally on the steps and it's sold to the highest bidder. This process is known as the trustee sale. The bidding generally opens with an automatic starting bid of whatever amount is owed on the property, so no, you're not going to show up and bid a dollar on a property and get it. It's whatever they owed on it is where the bid begins at. For example, if a home owner owed $80,000 on a loan and the loan secure the property, the bidding would start at $80,000. If no one bids any higher, the lien holder will be awarded the property and be given the title. So if nobody bids higher than $80,000, the bank's going to take that back at $80,000. When you buy on the courthouse steps, there may be liens attached. Also, you probably won't be able to see the inside of the property beforehand and the court usually requires all cash on the day you buy it, so you can kind of rule out getting a loan on it. This makes buying properties on the courthouse steps, a more advanced and maybe risky strategy that I usually don't recommend for beginners. But hey, it works. POST FORECLOSURE PHASE The third, and really honestly probably the most common phase that most people talk about when they talk about they bought a foreclosure, that is the actual post-foreclosure phase. It's the after the sale, on the courthouse steps, the new owner of the property, probably the bank who lent on it, unless somebody bids higher, they're going to have to evict the tenant, probably the former homeowner, who might still reside there. Now if it's a bank, the bank will generally go through the process of evicting the tenant, get the home listed with a real estate agent to sell it. The remainder of this article I'm going to focus on how to buy foreclosure in this phase, the post-foreclosure, after it's been filtered through the foreclosure process and is now available for sale publicly. Now, when a bank takes back the property and begins to sell it, the property is known as an REO, or a real estate owned property. Now it's this type of real estate deal, the REO properties, that I want to spend a lot of time on because that's what most people talk about when they're saying foreclosure. Specifically, let's talk about how to actually find these as well. The most common source of finding foreclosures is through the Utah multiple listing service, the MLS. The MLS is a collection of lists put together by local real estate agents, of all the properties for sale in their office. The website that your own now has multiple MLS’s connected to it and updates every 15 minutes or so with new data. In the old days, these lists were actually kept in file cabinets and each office faxed them to each other and made a big list. But today we've got all the internet. The MLS is fully accessible for any real estate agent, so if you're not an agent, give us a call today! The good thing is the real estate agent is typically paid for by the seller, so it's free for you because if you're buying, it doesn't cost you any money. However, you don't have to just rely on real estate agents to tell you what properties are listed. You can buy REOs directly from a bank's REO department. Banks typically have an REO department, somebody that is in charge of working through those properties. Now I said earlier, most REOs actually end up on the MLS, but it is possible to make connections with an REO department at a bank and have access to properties before they put on the MLS. This is especially true with smaller community banks and larger commercial properties. Third, the HUD store. Some properties have been foreclosed down by the US Department of Housing and Urban Development, which is HUD. So if you get a HUD loan and you get foreclosed on, a lot of times they're put on the MLS, but a lot of times they're just privately listed on the HUD website at hudhomestore.com, so be sure to check that out as well. Once you find a property you want to buy, it's time to submit your offer. Again, this is when a good licensed Utah real estate agent comes in really handy. Typically, you're going to meet with your agent, tell them, let them know the terms you want to offer. How much? When are you going to close? How are you going to finance it? Your agent will submit an offer to the seller and they'll look it over and then they got a few possibilities. First, they could accept it. Woo. They could deny it. Ugh. They could ignore you if it's too low. In other words, deny. Or most common, they could counter you. They'd tell you, No, not that, but how about this? And many times, if there's a lot of offers on a property, the seller's going to ask you to submit your highest and best offer. In other words, they're saying, All right, theres a lot of bidding here. Lets see what you got. Give us the most you can do. Now it's easy to fall into auction mode and overpay when that happens because you allow the emotion to catch up with you. But you know, stick to the numbers, keep the emotion out of it. You know, that really brings up a really, really important point here. Just because something is a foreclosure does not mean it's a good deal. In fact, most of them are not, so it's vital you learn how to analyze a real estate deal and know exactly how much you should pay for a property. All right, moving on. So let's say your offer gets accepted. Well, now it's time to do your due diligence and make sure all your ducks are in a row. This is a time where you hire an inspector to check out the property, you get your financing fully in place and in Utah the closing process is handled by a title company who's going to prepare all the documents, make sure the title's correct and arrange for the signing of all the parties. View all the active Utah Forclosured Listings on the MLS below.