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That said, you need to know what you're doing, as there are many pitfalls and rules that come with buying foreclosures. One way to stop a foreclosure is by "redeeming" the property. To redeem, you have to pay off the full amount of the loan before the foreclosure sale. The Pennsylvania Supreme Court ruled in the case of JPMorgan Chase Bank N.A. Clever always tries to provide the most up-to-date, accurate, and useful information available for our readers.
If the property owner hasn’t paid up by the time the redemption period expires, the lienholder can apply for a Treasurer’s Deed and claim the property. The minimum bid in a tax deed sale is typically the taxes owed, plus interest and the costs of the sale. In other words, a house or other piece of real estate worth hundreds of thousands of dollars could be auctioned for a tiny fraction of its value. That’s bad news for the homeowner, and potentially for other lienholders, such as a mortgage lender.
Pros and cons of buying a Pennsylvania foreclosure
So, don't get caught off guard if you're a Pennsylvania homeowner who's behind in mortgage payments. Learn about each step in a Pennsylvania foreclosure, from missing your first payment to a foreclosure sale. Once you understand the process, you can make the most of your situation and, hopefully, work out a way to save your home or at least get through the process with as little anxiety as possible. So, it's possible that you could purchase a property below fair-market value, but it's not quite as likely or easy as it would be in other states with simpler deficiency judgment laws. If a property doesn't sell during the pre-foreclosure period, it goes to foreclosure auction. Pennsylvania law requires that all foreclosed properties must go through a public auction before becoming real-estate owned .
Alternatively, the property owner and any lienholders may claim excess proceeds of the sale. In theory, a tax deed sale works the same way in many states. The only difference is that the tax lien holder gets first priority, even before the mortgage lender. For example, say there’s a $5,000 tax lien on the property described above.
How does buying a foreclosed home work in Pennsylvania?
Consider talking to one of Clever's recommended agents to see how they can help you find and buy your next home. The decision to buy a foreclosed house or not depends on your circumstances and the type of foreclosure you're interested in. If you're an investor, you should probably have a contractor come out with or after your visit to provide an assessment of how much work they think needs to be done and what it will cost. This is crucial for determining the after repair value of the home which can help you determine your potential profit when reselling the home. To learn more, read why we started Upsolve in 2016, our reviews from past users, and our press coverage from places like the New York Times and Wall Street Journal. Even in processes that involve competitive bidding, the bids are typically quite low compared to the value of the property.
Some homebuyers feel like they're taking advantage of someone else's misfortune when they buy a foreclosure. In this case, the peace of mind outweighs the potential profit you could achieve by purchasing one of these homes. Buyers should contact the auction's trustee for specific instructions on minimum bids, bid increments, and how to submit offers. In every homebuyer's journey, there's a point where they ask themselves if they should buy a foreclosure and save some money. With median Pennsylvania home prices up 10.07% in the past year and mortgage interest rates on the rise, finding an affordable foreclosure seems increasingly appealing. Clever’s Concierge Team can help you compare local agents and find the best expert for your search.
Foreclosure & sheriff sales
The problem is that tax lien sales rarely yield significant sums. In fact, in some states, the property is always sold for the amount of the tax lien plus costs of sale. So, in the example above, the property would be sold for $5,000 plus costs. And the investor would walk away with a $150,000 home for $5,000 plus costs. In a tax deed sale, the municipality goes straight to auctioning the property.
That said, there can be significant delays in dealing with REOs, so these are not for buyers who are in a hurry. The basic stages of foreclosure in Pennsylvania are pre-foreclosure, auction, and REO property. We recommend that you stick to pre-foreclosures and REOs if you're not a professional investor, as auctions can be risky and cash-intensive.
We recommend buyers who are in a hurry focus on pre-foreclosures, as those are more likely to close quickly and allow for conventional financing. Due to the Protecting Tenants at Foreclosure Act, investors who buy properties with tenants in place must honor the original lease. Anyone who intends to live in the home must give the current tenants at least 90 days to vacate the property.
That said, paying for and closing on an auctioned property shouldn't take more than a couple of weeks. Buyers who want a standardized experience working with professionals should consider REOs as a primary focus. These transactions go slower, but REO departments handle foreclosures all the time and have a tried-and-true method of selling them. These properties are also required by law to have the title checked and cleared before being foreclosed on, so there's an additional safety net for buyers.
In many cases, filing for Chapter 7 bankruptcy can delay the foreclosure by a matter of months. Or, if you want to save your home, filing for Chapter 13 bankruptcy might be the answer. To find out about the options available to you, speak with a local bankruptcy attorney. Pennsylvania law allows reinstatement up to one hour before the bidding at the foreclosure sale, a maximum of three times in any calendar year. If you default on your mortgage payments for your home in Pennsylvania, the foreclosure will be judicial.
It may be as simple as making a request to the local taxing authority. In other cases, judicial foreclosure proceedings may be required. In most states, the property owner has a right of redemption. That means there is a period of time that the homeowner can clear the tax lien.
We have world-class funders that include the U.S. government, former Google CEO Eric Schmidt, and leading foundations. It's one of the greatest civil rights injustices of our time that low-income families can’t access their basic rights when they can’t afford to pay for help. Combining direct services and advocacy, we’re fighting this injustice. In some situations, the homeowner may be able to clear the lien by selling the property. But it may allow them to preserve equity that would otherwise be lost in a property tax sale.
Most tax deed sale states don’t build in redemption rights for the property owner. In Pennsylvania, a deficiency judgment is allowed if the lender files a separate action within six months. If the lender is the purchaser at the foreclosure sale, the deficiency is limited by the property's fair market value.
All listing data is the copyrighted property of the aforesaid Associations and its MLS-IDX Participants with all rights reserved. The information contained herein is believed to be accurate, but no warranty as such is expressed or implied. The listing broker’s offer of compensation is made only to participants of the MLS where the listing is filed.
Whether you're interested in pre-foreclosures or REOs, being pre-approved and having a Proof of Funds letter will make your offer more competitive and allow you to close more quickly. In fact, most REO departments won't even consider your offer without a pre-approval letter. Published in a newspaper once a week for three weeks, with the first publication being not less than 21 days before the date of sale. You can find foreclosures foreclosures and pre-foreclosures on sites like Foreclosure.com, RealtyTrac, and Zillow, as well as on the MLS, by searching with foreclosure filters. To find details like time, date, and location of the auction, read the description of the auction advertisement, which you can find on your county sheriff's website or on sites like auction.com.
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