Short Sale And Foreclosures

If there’s anything good to come out of the recession, it’s that homes are much more affordable—and that includes Newport Beach real estate. Many buyers are taking advantage of this “buyer’s market” and looking into foreclosure and short sale properties. At first glance, they’re a tempting deal: you get a perfectly good home for practically half the price of Newport Beach homes for sale, or even less.

But as any smart buyer would expect, there’s always a catch. Just like any other city, Newport Beach CA has its share of unscrupulous sellers, buyers, agents and lenders. NewportOC.com offers these tips to help you avoid common pitfalls and get the best deals.

Know What You’re Buying

More often than not, you’re buying more than Newport Beach real estate when you pick a foreclosed or short sale property. You’re also buying the responsibility for any liens or liabilities the former owners may have left behind. You may think you’re getting a steal for a $100,000 home, but it could turn out to be a second mortgage, and you’ll have to shell out about twice as much to actually own it.

In Newport Beach CA, it’s often the case that you can’t even peek inside the property, let alone have an inspector come over. Newport Beach homes in foreclosure or short sale tend to require modifications that could easily eat up whatever cuts you’re getting. Remember, the former owners were likely in serious financial trouble—and maintenance was likely the least of their priorities.

Do A Title Search

These potential problems are seldom mentioned in listings for foreclosed Newport Beach homes for sale. So you’ll have to find some things out on your own. The first thing you’ll have to do is get a title search—a thorough examination of the title to verify its name, nature, and other important details. For most Newport Beach homes, the search will answer three main questions:

• Is there any profitable interest in the property on the part of the seller?
• Are there any restrictions in the use of the property, such as easements and right of way?
• Are there any liens that have to be paid at closing, such as back taxes and mortgages?

In the case of foreclosed or short sale homes, a title search would also give you an idea of how the owners fell behind and whether there were additional costs that could pose the same problem for you.

Get Insurance

A title search and title insurance go hand in hand. While you can do your own title search, it’s best to have it done by a Newport Beach CA title company that offers an insured search. Title insurance ensures that there are no deficiencies or encumbrances in the title, and that you will get clear ownership upon purchase. It also keeps you covered in case any creditors of the former owner come up and make a claim in your home. Take your time in choosing a search company—you want one with specific experience in Newport Beach real estate and has insured a good number of Newport Beach homes.

Check Into The Equity

The amount of equity in the home affects how profitable it is for you. Experts recommend limiting your choice to homes that have been lived in for at least two years. Even if the owners made interest-only payments, there will still be a good amount of equity built up since Newport Beach real estate values have risen in the past few years. Your title search will also show how much “money down” the owners put into the home—avoid those that have little to no down payment, as this will also cut into the equity.

Work With Your Agent

Short sales and foreclosures only came up in the last couple of years, so not all agents will have specific experience with Newport Beach real estate. To ease up the process, provide as much information as you can during the offer—any missing information can add several days to the processing time. Get pre-approved to increase your chances of a successful purchase.

Both you and your agent will need regular contact with the bank to see how the foreclosure or short sale is proceeding. While you don’t have to call them every day, it’s important to keep regular contact, especially since there are probably other Newport Beach CA eyeing the property. Work with your agent on making a strong initial offer.