You have bid on a foreclosure property and are the successful high bidder at the auction. What do you do next? Without question, one of your first orders of business should be to consult legal counsel, financial people and any other professional adviser you may need for their assistance so that your good fortune transitions smoothly into a successful close. You want to finalize all the terms of the sale as quickly as possible. Be sure you know the date you are expected to close on and the amount of money you will need to have at closing. Closing successfully is the pinnacle of this entire transaction. What you do prior to arriving at the closing table has a lot to do with that success.
You want to eliminate anything that may result in a closing delay. It does not matter if the subject property is vacant or occupied, here is a plan of action you may want to consider to thwart potential foreclosure property closing delays;
Consult with an insurance professional. Make arrangements to purchase the appropriate insurance. Insuring your interest in the property is important. If you are granted immediate prepossession of the property the insurance responsibility will most likely rest with you. If the property is vacant, you need to know what the policy stipulations are regarding vacant property. Find out what you need to know and what you need to do and get it done.
You want to protect the property. Find out whether the property is vacant or occupied. If vacant make sure it is secure. Generally the care and protection of the premises rest with the foreclosing lender until the closing. As the high bidder you should become acquainted with the condition of the property immediately and back this up. You can do this by creating a photo diary of the property which includes photographs that are dated and signed by a witness attesting to its state of condition. If this condition changes you have your verification and can possibly make a claim against the foreclosing lender’s insurance company. If the property is occupied, damages by the occupant probably will not be covered.
An additional protection step may be to hire one of the neighbors to watch the property for you. If the property is located in a neighborhood where the dwellings are in close proximity to one another, a watchful neighbor may be the best security. If the property is located in a sparsely populated location, an official looking cautionary sign such as; “DANGER! Poison Gas”, may deter would be vagrants and vandals.
Have a title search and report completed on the property. It is crucial that you know if there are any defects in the property title. Are there any existing liens or judgments currently attached to the property? If so, they need to be cleared up or satisfied. Your goal is a clear and marketable title. You do not need any encumbrances on the title that may make the property difficult or impossible for you to sell in the future. This report will inform you of all recorded encumbrances. You may also want to consider title insurance. Talk to your attorney of legal advisor about this.
If applicable, secure your property financing quickly. If you are the successful bidder at an auction that has a strict closing date requirement, you will need to expedite the mortgage financing approval using any legal means possible. Cooperation with the lending institution and its personnel is imperative. Providing access to the premises so that it can be inspected and appraised, is a must, unfriendly occupants who won’t allow access can cause delays. Major structural or mechanical system needing repairs may also result in potential delays to obtain financing. Time is of the essences. Take care of what is required so that the financing is in place by the time it is needed.
If your closing on the foreclosure property is contingent on you obtaining financing from a lender, any major delays could result in your inability to close in a timely fashion. Unless you come up with the necessary funds when needed, you could lose your down payment.
Following this plan will aid you in transitioning to a successful property close. Coasting to a successful close is your next step once your bid on a foreclosed property has been accepted. This can only happen if you know what is required of you and comply with the requirements. Have your lawyer review your agreements and explain them to you so that you are fully aware of all the conditions you are expected to comply to. Then, take care of them!