• Nicole Happel

Foreclosed home values in Colorado

A foreclosed home is a home whereby the lender, probably a bank has taken over the ownership, due to the homeowner’s inability to continue making payments for the mortgage. In simple terms, a foreclosed home refers to the legal process by which a lender (probably a bank) tries to recover the loan given to the borrower through a coerced sale of the home used as collateral for the loan. Before a property can be foreclosed, the lender must have initiated a legal termination of equitable right of redemption. Equitable right of redemption strips the homeowner the right to gain his property back; this grants the lender the equity and legal rights to the property; the lender becomes the owner of the property and has the right to sell it.

Many people are more interested in foreclosed homes as they are mostly sold below the market price; this makes it very beneficial to the buyer as they get the property at a lower price compared to other similar homes that are not foreclosed. In selling a foreclosed home, there are two factors to consider;

  • Pre-Foreclosing: Pre-foreclosing home sale involves the property owner trying to sell the property to enable them to pay off the mortgage they owe after being notified of possible foreclosure by the lender.

  • Foreclosed Sales: Foreclosed home sales involve the lender making sales of the property after taking over the ownership of the property.

A lot of real estate investors in Colorado tend to take advantage of the foreclosed homes since they are sold below the market price; hence, they can easily acquire them at a discount to enable them to flip the property at an incredible profit price. Home flipping refers to the process in which a real estate investor buys a home at a rate much lower to the market price, makes necessary repairs and renovations and sells the house at a profit.

Buying a foreclosed home is not an easy task especially if it falls in the pre-foreclosed category as the homeowner sees no need in making any repairs and in some instances damages certain areas in the home to wade off buyers since they are being forced out of their homes. Also, another factor that makes buying a foreclosed home a bit tedious is the fact that the homeowner has a limited time of mostly 30 days to complete a sale. Getting a deal that leaves both parties satisfied within this short frame of time tends to be a problem, and also completing the transaction before the final forfeiture to the bank is another major issue.

In Colorado, the law stipulates at least 30 days’ notice before filing the Notice of Election and Demand, and at least thirty days after default, the foreclosing party must mail the borrower a note containing the phone number for the state foreclosure hotline and a direct phone number for the foreclosing party’s loss mitigation department (Colo. Rev. Stat. § 38-38-102.5).

Colorado Law also mandates the public trustee to mail a combined notice of sale and right to cure and redeem (which includes the date and place of sale, among other things) to the borrower at two separate times (Colo. Rev. Stat. § 38-38-103).

Foreclosed homes in Colorado can also be acquired through auctions, whereby prospective investors are expected to bid on foreclosed homes, and the highest bidder gets the foreclosed homes. In auction sales of homes, the investor is expected to pay fully and in cash as there is no provision for a financed payment. The risk factor in purchasing a foreclosed home by auction is that the buyer might not be able to get the Title Insurance for such building.

Price of foreclosed homes depends on location and available amenities within the locality. If there are so many foreclosed homes in a particular neighborhood, it is not advisable to purchase such a property.


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