Honolulu Foreclosures, Is This A Good Way To Get A Good Buy?
April 21st, 2008 categories: Buying Honolulu Real Estate, Honolulu Real Estate 101
That is a definite maybe or maybe not! Let me start by saying that in Honolulu these are two methods of foreclosing on a mortgage. For years Hawaii was a judicial foreclosure State and in the late 1990’s a non-judicial foreclosure process was added by the legislature. If you are considering buying a foreclosure via a non-judicial sale, then I highly recommend that you engage a qualified attorney to advise you as to the process and any potential pit falls. I’ve looked into non-judicial purchases for my own account and I am not comfortable with the risks generated by the process. In summary beware of the non-judicial process.
The judicial process offers a more clear path to a valid sale and I believe that this is a result of it being a method that has been tested over time. It bring methodical statutes that give a step by step process to foreclose. It is expensive because it requires the filing of a lawsuit.
The highlights of a judicial foreclosure are as follows:
1) A foreclosure commissioner is appointed by the court.
2) The commissioner then advertises the auction of the property and holds open houses so prospective buyers can inspect the property.
3) On the appointed date, the commissioner holds an auction on the steps of the appropriate Court, and the property will be sold to the highest bidder, subject to a court confirmation of the sale.
4) Note that to be a bidder you must have a cashiers check payable to the court in the amount of 10% of the maximum amount you are willing to bid. If you are the successful bidder it is given to the commissioner as a non-refundable deposit. Should you fail to close the sale for any reason other than being over bid at the confirmation hearing, you may never see your 10% again.
5) Approximately 30 days after the auction on the court steps, a court hearing is then held. If there are no other bidders you will be confirmed as the buyer and the closing of the sale will proceed there after. However, if another buyer should show up at court with a willingness to increase the price by 5% or more, the judge will order an auction and whom ever bids the most will be the successful purchaser.
6) Be very clear you are buying the property “As Is, Where Is” and you may be obligated to buy even if the commissioner cannot obtain title insurance.
7) If you are represented by a real estate agent you will need to plan on paying a commission, as the commissioner does not pay a buyer’s real estate broker.
The previous seven points are an over view of the process and I recommend entering this arena of Honolulu real estate with a really good attorney at your side.
Back to my original question, are foreclosures the best way to go? Maybe…maybe not? All investment decisions should be made based on the value you receive in relation to the overall market. Buy a foreclosure if it is the best buy you can find. If not, don’t forget that bargains can be bad in the normal Honolulu real estate market. Remember, just because it is a foreclosure does not mean it is automatically a good buy.
