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Before bank owned properties and foreclosures became the buzz words for a generation, there were the myths and mystery surrounding them.  Through spending the last 5 years involved in this aspect of real estate, I realize that not many people understand what really happens to a house in foreclosure.  After reading this article if you have any additional questions about foreclosures or bank owned properties in Plainfield, Naperville, or anywhere in Illinois, feel free to contact me with questions.

Plainfield and Naperville Foreclosure and Short Sale FAQ’s:

• Illinois is a judicial state in which the homeowner must be sued by the lender in order to be granted repossession of the asset by a court of law.  Until the auction has taken place and ownership has been transferred the owner is in possession of the home.

• Lis Pendens are the documents filed at the beginning of a foreclosure once a homeowner misses 2-3 payments with their lender.

• The foreclosure process takes about 4-9 months after the Lis Pendens has been filed for the the foreclosure to be complete.

• Foreclosure can be avoided only by selling the property either traditionally or through a short sale, bringing the loan current, or a loan modification.

• Once a payment has been missed a lender will not accept partial payments, and the debt often begins to snowball.

• A property becomes an REO or bank owned property when the minimum bid at the auction (made by the bank)  to satisfy the loan at auction is not met.

• Abandoned properties that are in need of exterior maintenance such as lawn care, vandalism and graffiti can be addressed by contacting “neighborhood services” through the local municipalities.

• Short sales are sales that sell for less than what a homeowner currently owes, that are subject to the banks approval.  While short sales are often fabulous deals, they often take weeks or months to complete.
  

Plainfield and Naperville Foreclosure Myths Revealed…

Myth: REO’s or bank owned properties are the best deal in real estate.

Truth: Pre-foreclosures or short sales will probably give you more bang for your buck.  Pre-foreclosure simply means that the homeowner still controls the property, and a short sale means that the house is being sold for less than what the seller owes with the banks consent and approval.  A short sale done right, gives the buyer the best opportunity to get a great deal… and the seller the best opportunity to avoid a foreclosure.  Short sales take longer to approve than regular residential real estate, but sometimes they are worth the wait.   Bank owned properties have often been damaged by disgruntled owners who were distraught about losing their home; pre-foreclosure properties on the other hand are often in move in condition because the owners are still living there, depending on where they are in the process. 

Myth: If I’m in foreclosure I need to move out right away because I’m going to get evicted anyway.

Truth: Stop! Don’t move out! List your house for sale and attempt to sell your house by performing a short sale!!! While your waiting for the home to sell, start saving the money you would have spent and put it in the bank.  You will need for the 1st and last months rent when you move out.  Expect that the foreclosure will affect your credit for the next 2-7 years depending on whether or not you are able to avoid the foreclosure through a short sale.  Save every penny you can during this time.  Plus your home will probably sell faster if it isn’t vacant and abandoned. Homes that appear to be abandoned will often have the auction date accelerated by the lender.

Myth:  My homeowners association is responsible for the exterior maintenance of vacant properties in my neighborhood.

Truth:  Contact your cities ‘neighborhood services’ contact for properties that are in need of exterior maintenance such as lawn care or weed abatement.  They can place a lien on the property, but you will have better luck contacting the “neighborhood services” contact for the city of Plainfield, or the city of Joliet.  Homeowners associations will not maintain vacant properties, but can put the pressure on the lender if the property actually gets returned to the bank’s possession.

Myth:  Banks will take anything to get rid of a property…

Truth: The banks will take anything that makes sense to their situation.  If an offer does not meet their criteria for a specific property they will not entertain the offer.  Most likely they will counter the offer, but take note:  their counter is a good indication of what they are wiling to negotiate to!

Myth:  If a house is vacant it means that the house has been foreclosed on and the bank owns the property. 

Truth:  A home is only bank owned if there are no bidders at the auction and it then becomes the repossessed collateral for the bank, in exchange for the debt owed by the previous owner.  The deed is recorded at the county assessors office.  Vacant homes can occur for any number of reasons, and most likely if it is not bank owned, it means that the owners abandoned the property during the process of foreclosure.  Who controls the property is a determining factor regarding who is responsible for the property and all of it’s maintenance. 

Do you have a question about foreclosure or bank owned properties that you want to see answered?  Call me at 630-673-6233, or contact me using the button at the top of the page.