Buying Foreclosed Property? Knowledge is Power - March 2023

Buying Foreclosed Property? Knowledge is Power

By Diana Brazeale

Adventurous real estate investors can make good money buying foreclosed homes, remodeling them, and then reselling them. Would-be investors who do not do their homework on foreclosed properties can end up losing money and finding themselves in court. Fortunately, there are many resources available for investors willing to spend the time to research their potential purchases.

Foreclosure notices can be found in the legal classified ads in the local newspaper or in online sites that aggregate foreclosure listings. Often a foreclosure notice will not include a property address, but rather will only mention the current owner’s name, the legal description, and the successor trustee for the foreclosing party. If the successor trustee is a law firm that specializes in foreclosures, the address will usually be available on the firm web site. If it is not, then the county collector and assessor sites are an excellent source of information. Searching the owner’s name on the county

collector’s site will yield an address and may also tell you if the property is owner-occupied. If the real estate tax bill is going to a different address than the property, the property is likely a rental. In that case, search the property’s mailing address in the personal property section to find out who is receiving mail at the property. This person may be a tenant.

Once you have an address, go to the county assessor’s site to view the property record card, which will tell you how the property is zoned and give the assessor’s value of the property, which, it must be said, often does not reflect the property’s actual market value. At the county assessor’s site you can also view an aerial photo of the property and see the surrounding neighborhood.

If your interest in the property is sufficient, drive by the property and visually inspect it as best you can without trespassing. Next, visit the office of the recorder of deeds to research the title. Search first by owner name to discern if there are any other liens on the property and note when each lien was recorded. This is important because a foreclosure wipes out junior liens, but not senior liens. You should also search by legal description, which will reveal any liens that are not in the name of the owner as well as any easements or shared well agreements. If you see a “notice of lis pendens,” pay particular attention, as this is a notice that there is litigation affecting the title to the property. Look up the litigation on Missouri case.net for more information. Searching the owner and any occupants on case.net may reveal judgment liens and may also tell you if anyone connected with the property is litigious. Bear in mind that an owner or tenant determined to fight the foreclosure or eviction can cost you valuable time and thousands in attorney fees.

The next step is to contact the successor trustee to find out what the opening bid will be at the foreclosure sale. By this point, your research should have given you a good idea of the value of the property and the amount that you would be willing to spend. Note that foreclosure sales are cash sales, so you need to be prepared to present the successor trustee with cash or a cashier’s check on the day of the sale. If you do not have ready cash, consult your banker about a line of credit. Once you purchase the property, you can refinance with a traditional real estate loan.

Once you’ve won the bidding and have your deed in hand, the final step is to take possession of the property. If it is vacant, this is easy. If it occupied, you will have to file an unlawful detainer action to evict any former owners, tenants, or squatters. If this process sounds daunting, keep in mind that a few hours

of research can make the difference between a profitable investment and a financial disaster. If you need assistance, call the number below.

Diana Brazeale is a real estate attorney and the owner of Brazeale Law Firm, LLC in Branson, Missouri. She has twenty-five years of experience in the practice of law. 417-334-7494