Foreclosures Jackson Hole
Distressed, foreclosed, short sales, and bank owned properties may offer the buyer a unique opportunity. However, the process of purchasing these properties is often lengthy and complicated. Working with a knowledgeable real estate broker who understands and has experience with this process is essential.
What is a Foreclosure?
Foreclosure is a legal proceeding to terminate a borrower’s interest in a property instituted by a creditor to either gain title to the property or to force a sale in order to satisfy the unpaid debt secured by the property.
What is an REO?
REO stands for Real Estate Owned and is a common term for a bank-owned property meaning the bank has already taken the property back through foreclosure proceedings.
What are redemption rights?
Redemption rights are those rights a property owner has to pay off their debt after a foreclosure sale – these rights vary by state. In Wyoming, the owner has a 90 day redemption period which means they can pay the foreclosure buyer the amount the buyer paid at the auction + interest and not lose their home. Following the owner’s 90 day redemption period, any junior lien holders have a 30 day redemption period in which they can redeem the property to protect their lien. In Idaho there is no redemption period.
What is a short sale?
A short sale is a property sale that occurs where the proceeds from the sale are less than what is owed on the property. To accomplish this, the creditor/s must agree to accept less than what they are owed from the owner.
The Foreclosure Process
(Wyoming & Idaho)
1) the owner becomes in default of their mortgage or lien and is given notice by the creditor that they have started the statutory process of foreclosure.
2) Foreclosure sale takes place, conducted at the Courthouse steps (WY) or at a title office (ID) and the property is auctioned.
3) The highest bidder must pay the full amount of the sale by 5:00 PM that day.
4) In Idaho, the process is complete and the deed issued.
5) In Wyoming, the Sheriff issues and records a Certificate of Sale which creates a lien against the property. Legal title remains with the owner until the completion of both redemption periods.
6) The Certificate of Sale may be assigned or sold or kept.
7) If the owner or junior lien holders do not redeem, a Sheriff’s Deed is recorded and the buyer at the Courthouse steps becomes the owner of the property.
8) An eviction process may be necessary to remove the prior owner.
Does a foreclosure remove all liens?
Not always. A foreclosure sale removes all liens that are junior (later in date) than the lien being foreclosed on. Examples: 1) a first mortgage is foreclosed on and there are no other debts recorded prior to that mortgage – all subsequent liens (2nd mortgage, mechanics liens, etc) are removed at the foreclosure sale but 2) if a 2nd mortgage is foreclosed on, the property is bought with all subsequent liens removed but still subject to the 1st mortgage.
Tax liens are always the debts first in line (you can never remove a tax lien at a foreclosure sale, Uncle Sam ALWAYS gets his first).
Is title insurance available for short sale and foreclosure properties?
Yes. Short sales are completed like normal transactions and getting title insurance is no different than a typical sale. For foreclosure auction sales, title insurance cannot be given until the redemption period has expired.
If you are purchasing a property at auction, you will want to obtain a title commitment ahead of time to understand what issues the title company will not insure.
Graham Faupel welcomes the opportunity to help you buy foreclosed property. The process in Wyoming is complex as a result of its statutory redemption periods (one for the owner, one for junior lien holders) and it can take months from the time a property is sold back to the bank at the courthouse steps to the time the bank is able to sell the property. Much can happen during this time and we have the expertise, knowledge & experience to get your deal done. Conversely, in Idaho, the process can be much quicker and ownership changes without delay creating narrow windows of opportunity for buyers with specific purchase requirements. Because we closely follow properties in the foreclosure process, we know when these windows exist for your purchase.
SHORT SALE BASICS
Short Sale contracts require a TREMENDOUS amount of additional care, time & consideration from both the client and the agent. Without the guidance of an experienced agent, a buyer may be at risk of losing a deal as a result of misunderstanding conditions or time frames or, at the last minute, find themselves forced to negotiate less favorable terms.
Key Points for Sellers:
1. Start talking with the bank as soon as you know the property will be short – this can save weeks in the short sale process.
2. Price the property to market – don’t waste time hoping it will sell for more than that.
3. Get a “Bank Approved Price” if you can get it, then price the listing at this level.
Key Points for Buyers:
1. Know that an offer will be a short sale before you submit it.
2. Understand the process of a short sale – make sure they understand the Short Sale Addendum, make sure your agent understands it as well.
3. Have your agent talk to the seller’s agent before submitting the offer – what can they tell you to help out.
4. Be patient.
5. Make sure your agent is relentless with the other agent and feedback from the bank.
6. Don’t stop looking for deals – the buyer can get out at any time.
7. Make sure that you see the HUD before it goes with the contract to the bank for Short Sale Approval. Once the bank approves something, they will not change their acceptance and take less.
8. Be prepared to accept all defects with the property found in an inspection or walk away from the deal. The bank will fix NOTHING unless it materially changes the value of the property and they cannot ignore it (holes in the roof, mold problems, etc).
9. Double check everything – if there is a math error somewhere, it always costs the buyer.
10. Be prepared to be countered by the seller after they get a response from the bank or a better offer.
11. Time is NOT your friend – it allows someone to come in and offer more and kick you out.
Short Sales offer the opportunity for buyers to find a great deal or for sellers to negotiate themselves out of all or a portion of the debt that exceeds the value of a property. Before you jump into the process or write an offer make sure you are working with an agent who is an expert with this process. As much as there exists an opportunity for a deal, there are pitfalls and ways to lose out throughout the process.
Graham Faupel welcomes the opportunity to help you through the short sale process. Our team of 7 has the most Short Sale experience in Jackson Hole and can help ensure the process goes smoothly so that nothing is missed that results in additional costs or creates a delay that causes a deal to fail. We have a contract administrator who diligently manages timelines & costs as well as agents who understand how to structure deals that have the greatest chance for success.