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Court-ordered real estate sales offer deals, risks
It’s a small house on a mid-sized lot, and its sticker price is about half the average selling price of a single-family home in Richmond.
The catch with this Burkeville rancher is it’s a court-ordered sale.
Eight residential properties on the Richmond market this month were court-ordered sales—three detached houses and five homes in multi-family developments, ranging in price from $199,900 to $889,000.
Buyers looking for a deal just might find it—but it’s not a guarantee.
“I always caution people when they’re chasing closures because they could be missing out on other deals as well,” said Brian Couture, a realtor with RE/MAX Sabre Realty.
Court-ordered sales are a result of a judge’s order, often in the case of foreclosure—when an owner fails to make mortgage payments. Other circumstances that prompt the forced sale are divorce, failure to pay taxes or seizure by law enforcement.
Compared to south of the border, foreclosures in Richmond aren’t common—but Couture said he has seen numbers rise in recent history.
He cautioned that the process of court-ordered sales isn’t as straightforward as other sales, but said some buyers—usually investors—are drawn to them.
A court-ordered sale begins once a judge rules to sell the property. A real estate agent is chosen and the home is often listed at an undervalued price. That can result in multiple offers—and disappointment.
“The issue with foreclosures, until you actually are registered on the title of that home, the seller can redeem that property,” said Couture.
Another issue is that an offer only triggers a court date. So if the property is priced low, chances are, other buyers’ agents will also show up at court with offers. A judge is compelled to accept the best subject-free deal—usually meaning the highest bid.
All this can trigger a bidding war, as agents representing lower bids have the option to resubmit a better offer.
“I’ve seen people lose homes by, I believe it was $200,” said Couture. “I just make sure (clients) are educated about the process, so they’re not surprised that if they do end up losing a home by a couple hundred dollars.”
Another consideration is that properties are sold as is. When a homeowner is forced to leave his home, it’s possible the condition of the property upon possession isn’t the same as originally viewed. Upset sellers might have caused damage or taken appliances with them. Couture said he knows of an investor who took possession of a foreclosed house with everything that could be sold from it—including copper wire—gone.
“That definitely can happen... Who’s living in the home can make a difference,” said Couture. “If it’s owner-occupied and it’s being foreclosed, I’d probably be a little more cautious about it.”