Honolulu Condos: Things that You Should Know about Foreclosure Properties in Hawaii

Things that You Should Know about Foreclosure Properties in Hawaii

Does buying a foreclosure property really make sense? Here's a very brief explanation of things that you should know about foreclosure properties.

Facts:

On Oahu, during 2009, the average price paid as a percentage of the property's tax assessed value for all sales reported through the board of realtors was 95%.  It was much less for foreclosure sales.  74% for Post-foreclosure sales (lender sales) and 79% for Pre-foreclosure sales (short sales). 

It might appear that you would get a much better value by purchasing a foreclosure property.  However, there are more factors that we must investigate before deciding.

Foreclosure Process in Hawaii:

There are several types of foreclosure sales:
-        Pre-foreclosure sales: known as Short Sales
-        Post-foreclosure sales: known as Lender Sales (or REOs - "Real Estate Owned")
-        Judicial foreclosure auctions
-        Non-judicial foreclosure (power of sale) auctions

Short Sale:

Short Sales occur when the purchase price of the property is "short" of, or less than, what is owed on the property combined with the associated cost of the sale and the lien holders (lenders) are asked to release the liens allowing the sale to occur.  The sale only occurs if the lender approves the short sale.  Lenders only approve a short sale if it minimizes their losses as compared to processing a more costly foreclosure.  Buying a short sale typically takes 4 to 7 months and is a laborious process and sometimes risky

Lender Sale:

A Lender Sale happens after the foreclosure has occurred and the lien holder now owns the property.  The lender usually rehabs the property so that it is in fair or better condition for the new buyer.  These sales typically take less than 45 days.  However, it is important to check with the title company to confirm that title has been transferred to the lender and they now have marketable title to sell the property.  Otherwise, the sale could stay caught up in Land Court indefinitely.

Judicial and Non-Judicial Auctions:

Judicial and non-Judicial auctions take place at the court house steps.  Judicial foreclosures require a hearing after the auction allowing a second round of bidding.  Non-judicial foreclosures allow the purchase of the property immediately.  A cashier's check for the down payment is submitted moments after the bidding process is completed, and the balance of the monies have to be paid within a short amount of time (i.e., 30 days).  Both foreclosures do not include the use of real estate agents, so it is important for the bidder to do their own detailed research. 

I believe the biggest misinterpretation buyers have about distressed properties like these in Honolulu and Oahu, is that they always represent the best value or biggest bargain.  I find, that many times an equity owner, with little or no mortage and motivated to sell, will often offer the best value in today's market.  That said, it is wise to keep an open mind and consider all properties for sale, as conditions and risks can vary greatly.

If you are interested in purchasing a foreclosure, please feel free to contact me to discuss your options.  For our weekly Honolulu Condos "Listings Alerts" Newsletter including all foreclosure home and condo properties for sale in Honolulu and Oahu please visit our website at www.HNLCondos.com or click on the links hee.