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Tenants in Foreclosure: Los Angeles and Beyond (Part Two)

Posted by Tim Lam | Jan 14, 2013 | 0 Comments

In some cases, a tenant in a foreclosed property may be offered the chance to move out early in exchange for payment, or even the opportunity to buy the property from the new owner at a discount.  Before accepting such an offer, make sure that the party offering is the legitimate owner, and that they're authorized to do so.  Furthermore, while the chance to own might seem like a good idea on its face, there are pitfalls.  It is imperative that you pay an independent appraiser to give you a realistic valuation of the property.  Have an expert conduct a thorough inspection of the property to find any defects or issues that could cause a nasty surprise down the road. Truly consider whether owning is the right option for you.  Locking into a home loan, even if your payments are less than what you're paying in rent now, is a commitment that encompasses more than just making payments.  Take a look at comparable sales in the community.  Just because you're getting a good deal on the home at the time does not mean that the property is not going to depreciate further in the future.  Especially look out for other foreclosures, properties which have remained on the market for a long time, falling rent rates, and properties that have been re-listed at lower prices in the recent past.  Determine if there are any outstanding loans, liens, or other anchors associated with the property - a competent real estate attorney can help with this. Finally, don't be afraid to make a counter-offer to the seller. Sellers in such situations will often represent their initial offer as a "deal" by their appraisal, when in fact they're just fishing for suckers - if you've done your due diligence and determined that the property is overvalued, write a short letter articulating your findings and presenting a reasonable offer.  It never hurts to try.

Especially in the last two to three years, banks and purchasers of foreclosed properties have become very aggressive in their actions against existing tenants.  If you feel that you're being pressured to accept an arrangement that violates the protections you are entitled to, an experienced real estate attorney with a working knowledge of your area of residence may be able to help.

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