Is the US SBA a good source of foreclosures?
The US Small Business Administration (SBA) manages loan programs to encourage business start-ups across the country. This involves them in a guaranty of up to 85% of the loans that applicants organize with lenders. Because a large proportion of new businesses fail in the first two years of operation, this leaves the SBA with a number of defaulters on loan payments and, as a result, all types of properties including land, business premises and family homes may be seized as part of the foreclosure process.
The SBA must sell these properties as rapidly as they can to realize the cash and put it back into the system for their mainstream operations; helping more new-start businesses. This means that the properties are price-tagged at a good discount below the market value, partly to ensure a sale and also to offset any problems associated with the property. For example a business may have failed because of a major chemical spillage which they could not afford to clean up. The chemical spill may still need to be dealt with before the property can be fully utilized. Any new owner would need to factor in the clean-up cost to decide whether the property was such a good deal after all.
As with any type of foreclosure, the previous owners may have suffered poor income for a period of time causing them to cut back on building maintenance. The distressed condition of the property can vary from simple decoration through to electrical, plumbing, drainage, heating and structural problems which have been allowed to deteriorate without remedy or repair. The property may also have been vacant for a period of time making it vulnerable to vandalism. This will inevitably mean that there will be remedial work necessary to bring the buildings back to a reasonable standard.
Foreclosed properties on the SBA website vary in number from month to month and it is not a vast resource but, being a Government Agency it has a duty to be transparent in its activities. What you see is what you get and the process is a straightforward one. The SBA has local offices in every state and the property will sometimes be sold directly by the office or through a local real-estate broker.
SBA foreclosure properties will, in most cases be free of unpaid taxes as the SBA will have paid these to redeem the property. However any interest and penalties due on the taxes will not have been cleared because of the different status of liens on a property title.
The SBA is just one of a number of government agencies that deal with foreclosed properties. Others to check out are the Department of Housing and Urban Development (HUD), the Federal National Mortgage Association (Fannie Mae), the Federal Deposit Insurance Corporation (FDIC) and the Department of Veteran Affairs (VA). The rules vary from agency to agency. In some departments potential owner-occupiers are given priority over investors, however in all cases, almost anyone can make a sealed bid for a foreclosed property and a judgment will be made whether the bid is appropriate and acceptable.