Buying a foreclosed property in New Jersey can offer a good deal but has legal complexities. You must understand these complexities to avoid financial losses and ensure a smooth transaction.
NJ foreclosure process
In New Jersey, foreclosures are judicial, meaning they go through the court system. The lender initiates legal action when a homeowner fails to pay their mortgage. The court may side with the lender, resulting in a public sale of the property. At this auction, the highest offer secures ownership of the foreclosed home. As a potential buyer, you can purchase the property at this auction or through a real estate-owned (REO) sale if the property does not sell at auction.
What to do before buying foreclosed properties
Before buying a foreclosed property, take these crucial steps:
- Title search: Conduct a thorough title search to reveal any liens or encumbrances on the property. Hire a title company or real estate attorney for this task.
- Property inspection: Inspect the property thoroughly. Foreclosed properties sell “as-is,” so hire a professional home inspector to identify potential issues.
- Financing: Secure financing before making an offer. Lenders may view foreclosed properties as higher risk, so work with a lender experienced in these transactions.
- Redemption rights: Be aware of redemption rights. In New Jersey, homeowners can reclaim their property within ten days of the sale by paying the total amount owed, including fees and interest.
You will be better prepared and have a better idea of the pros and cons of buying the foreclosed property after you have done your due diligence. However, consider consulting a real estate attorney to ensure you cover all aspects of the purchase.
