For November 2011, there were 474 foreclosures with 1 in every 954 houses receiving some sort of foreclosure notice in Rhode Island according to RealtyTrac. The average foreclosure sale price was approximately $117,000. With prices like that, it is no wonder so many investors/buyers are purchasing Rhode Island repossessed homes and pre-foreclosure short sales.
In Rhode Island, the lender can sell a home when the borrower defaults on their mortgage at a foreclosure auction. Buyers who want to bid can obtain information on foreclosure auction sales by checking each city or county or looking online at various websites or the local newspaper for a notice of sale information. Rhode Island foreclosure auctions sales are open to the public and the highest bidder is awarded the property.
Lenders can post a notice of sale for three weeks by publishing it in a local Rhode Island newspaper in the county where the property is located. You might want to drive by the property first and also find out when the inspection date is so you can hire a home inspector to get an idea about the condition of the property. Each newspaper notice will tell you the date of the sale, time and place as well. Most sales are cash only. Be sure to have your funds ready in case your bid is selected at the auction. Have a local Realtor prepare a market analysis for you so you know what to bid. You will receive a deed which you should then record immediately with the local Rhode Island County recorder’s office in the county where the property is located to protect your interest in the property.
Auction property is sold as is and it is important to do your due diligence. You generally need a 10% down payment to bid. There are no contingencies allowed, and you have to close quickly with cash. Besides having an inspection, you should order a title search to make sure there are no liens. If there are liens, you will have to pay them off if you acquire the property. You will also have to pay for evicting any former owners or tenants from the property. Auction properties do not qualify for title issuance either. Purchasing a foreclosure property at an auction is a fast paced and exciting process so you should bring someone with you who is familiar with bidding at auctions if you have never bid before. Try not to get caught
up in the excitement of bidding so you don’t end up over bidding. Just because a home is sold at a foreclosure auction, doesn’t always mean it’s a good deal. So if you have done your home work and you know the price is a bargain, then you should consider bidding on it. Be prepared to pay a price you are comfortable with and budget for any repairs.
REO’s and Pre-Foreclosures
You may also want to consider purchasing a REO directly from the bank or a short sale from a distressed property owner. Keep in mind though with a short sale, the seller’s lender must approve the sale. Sometimes, this can take up to six months or longer, and there is no guarantee the lender will approve the sale either. With a REO, the property has already gone through the foreclosure process. Most REO’s are properties that banks buy back because they did not sell at a foreclosure auction. REO’s and short sales are also good ways to purchase bargain Rhode Island real estate. With a REO and a short sale, you can obtain title insurance and you can get your own financing as well. You should do an inspection to find out the condition of the property. The properties are also sold as is, but this way you know what you are getting by conducting an inspection. If the home needs too many expensive major system repairs, you might want to find another property.