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11 Facts About Home Repossession

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Repossessed property auctions in the United States are typically known as foreclosures. Before taking a deep dive into that list of repossessed homes, take a good look at the facts behind this sector of the real estate industry.

Connecticut

Due to its status as a judicial foreclosure state, Connecticut ranks among the top states with foreclosure inventory. The average delinquency in the state is 2.5 years.

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Repossession, Defined

In a repossession, a bank or lender works to reclaim a property from its owners when they miss mortgage payments. Then, the lenders want to get rid of the property as soon as possible and to get a fair price to cover their liability.

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The Lender's Perspective

The lender will work in their own best interest and not in the interest of the seller or buyer. A buyer may have a hard time getting a loan, as many foreclosures don't qualify for a mortgage.

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Exchange and Completion

A repossessed house for sale has a very limited time for exchange and completion. Exchange and completion typically happen at the same time.

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Owners' Rights

Owners have the right to stop the sale process at any time and launch a legal proceeding if they are unhappy with the price the bank secures. Completing the sale quickly makes for a shorter timeframe available to the owner to stop the process.

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Cash Buyers

Cash buyers have an easier time purchasing a repossessed house. Getting a mortgage within 28 days is usually too aggressive. Any additional time opens up the timeframe for the owners to protest the process.

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Private Mortgage Insurance

Lenders require private mortgage insurance on conventional loans with less than 20 percent down, as stated by the website Bankrate.com. PMI protects the lenders in case the borrower ends up in foreclosure.

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Foreclosures

In the United States, repossessed homes owned by the bank are more commonly known as foreclosures. Home inspections are not possible with most foreclosures, so it can be difficult to know how much money you need to invest to make the home sellable again.

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Tenant Eviction

Buyers of foreclosed properties often have the responsibility of evicting the current tenants. Eviction can be a costly and lengthy legal process.

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Neighborhood Home Value

One foreclosure in your neighborhood can bring the property value down. If you're considering shopping for bank-owned properties, enlist a real estate agent with experience in foreclosures and prepare yourself for an emotional ride.

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Real Estate Lawyer

A good real estate lawyer is also essential when you're venturing into the world of repossessed homes. Legal counsel will help you to interpret the contract, which will differ greatly from a conventional sales agreement.

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