Buying Foreclosure advice needed

[DisneyMomJen]

Ok, I am panicking right now. There has been a house in and out of preforeclosure for the past 3 years. We know the family. We put an offer into them about 3 years ago but it was $100K less than the amount required to get out of their debt (multiple mortgages, credit cards, etc). I thought our offer was very fair and did not want to go higher since it may have been higher than the value of the house. They have since filed for bankruptcy twice, which I thought they were able to get, but not sure. I heard 2 days ago that they were going to lose their house, but assumed it was going into preforeclosure again. It is listed online as of yesterday as preforclosure but an auction date of April 4th. Of course we just planned to go to Disney and have our airline tickets! My question is, does anyone know how this auction process works? do you have to be there or should a lawyer represent you? Is the asking price the minmum they will accept or is that the amount of the outstanding loans? Will this date definitely be the date that it goes up for auction? I just don't know where to begin! I called our realtor who is trying to find out info. I also called our bank about getting a larger equity line of credit to carry us through this purchase. Thanks for any adivce!

 

[sarahlovesmickey]

Wow. Tough situation for all. =( Our former neighbors divorced and just let their house go. Just the other day actually they were having an auction there and people actually came to their house to bid. I'm not sure if you can do it via phone. Good luck though!!

 

[3 MEN AND A BOAT]

I've participated in several types. 1 was at the house with people making bids, others have been at the courthouse steps were I had a realtor bid for me.
If thats the date they stated I would assume thats the date of auction. Theirs usually a starting bid and if Im not willing to pay it, I don't go, but evrythings up for negotiation, wait till after the auction and if no-one buys it, then make an offer.

 

[DisneyMomJen]

I've participated in several types. 1 was at the house with people making bids, others have been at the courthouse steps were I had a realtor bid for me.
If thats the date they stated I would assume thats the date of auction. Theirs usually a starting bid and if Im not willing to pay it, I don't go, but evrythings up for negotiation, wait till after the auction and if no-one buys it, then make an offer.

Thanks for the advice. Do you know who I would make an offer to - the bank or the owner?

 

[NikkiV]

I just bought a foreclosure and looked at many foreclosures. It appeared that the auction was almost a formality, with the bank typically buying it back at auction then several months later listing it with a realtor. I can say the process took a long time and if you are seriously considering buying a foreclosure be sure to use a realtor experienced with REO's. I had a very experienced realtor however, no REO experience and her lack of experience cost us about 5K. If you end up buying through a realtor instead of auction and negotiate for closing costs, understand that the transfer tax is not considered a closing cost however, you can use that money to buy points to lower your rate (lesson learned from not using it correctly )

Good luck!!

 

[Sheaboys]

We just purchased a home that was Foreclosed on. I have no experience with auctions though. I will tell you, the bank owned the house, they had it listed with a Realtor. Our realtor did the work for us, we put in an offer, he sent it to the other agent, and back and forth. Until the bank accepted our offer.

It was long process for us, because of the loan we got (SBA, which is through the Federal Government, because we were in a tornado and they were offering rates so low, we could not pass it up), but I think the process would have been faster, had we done a regular loan.

We put an offer in August (end) we closed December 16th. The house was already empty, so that was not an issue.

WE just have no knowledge of the house, since it was sold as is. We got it for a steal, knew the house, had an inspection, so we felt comfortable with that. The bank did pay closing costs, something that was listed on the MLS sheet and it came with a 2yr home warranty, which is pretty useless since there were no appliances in the house.

Good luck!

 

[3 MEN AND A BOAT]

Thanks for the advice. Do you know who I would make an offer to - the bank or the owner?

you can make an offer to the person loosing the home or wait till their foreclosed/evicted, but my experience owners want to much. its sounds harsh but they are loosing their home because they can't afford it, they shouldn't expect to make a profit from this.
to be fair I also lowball the bank.

 

[WeLuvDCL]

RealtyTrac is a great resource. Check out this info:
http://www.realtytrac.com/foreclosure/how-to-buy-foreclosures.html

If you are serious, contact a real estate agent asap. Best to go with a popular agent (like requesting one form ReMax) for an REO.

There is also a link to info by state.

 

[daileyad]

My understanding of the auction process in a foreclosure is that you have to have the entire sum of money in cash to pay at the auction. In other words you can't take out a mortgage - but hopefully you already understand that

 

[ktlm]

The forclosure and auction process is different in the different states. Here is a link to a website that on the right hand sides has links by state talking about the procedures and laws for that state.

http://www.realtytrac.com/foreclosure-laws/index.html

Some places you might be able to get with the mortgate holder/bank and the homeowner and purchase the property before the auction if you can agree on a price. Other places once the notice of the action is published the auction has to take place. As someone said, often the bank re-purchases the house at the auction and then re-lists it, but this is not always the case. Someplaces you have to pay at the auction immediately, other places you just enter into a contract at the auction. Some places you would have to appear at the auction and sign the papers there. Other places you can send a realtor or attorney to the auction and they can make the deal and then you can sign the papers later. Really, you need to talk to someone who deals with foreclosure sales in your area to know what needs to be done where you are located. I agree that if your realtor doesn't have any experience with foreclosure sales that you should find one who does.

 

[donkeyandshrek]

First - every state has different foreclosure laws. So, talking with a real estate agent knowledgeable in REO AND a real estate lawyer knowledgeable in REO is a must. Also, if you are serious about this property - act quickly!

Next - you said the house is "listed". Is it "listed" with a realtor, "listed" as a pre-foreclosure on a website - where is is "listed" ???

Your answer to THAT question dictates what your next move is....

You can negotiate a contract with the current owner for less than the payoff of the loan - called a short sale - the lender will have to approve it in writing and - believe it or not - now have programs to give the seller's money to walk away from it (up to $13,000! believe that or not!) So, ask your realtor if it is possible to do a short sale on the property before it actually goes to foreclosure.

If a short sale is not possible, then April 4 is the sale date. "Auction" is another broad term. It can be a literal auction at the property address or it can be an auction by the foreclosure company at the courthouse steps - you need to find out....

I am going to stop here and check back later for your posts. I lurk a lot and post very little, so IDK if you can PM me or not.... BEST OF LUCK!

 

[donkeyandshrek]

oh - one more thing - doubtful that you will have to "pay in cash" at the auction BUT you will definitely need a pre-approval letter from your bank/mortgage company - whether you do a short sale or auction

 

[bas71873]

WE just have no knowledge of the house, since it was sold as is. We got it for a steal, knew the house, had an inspection, so we felt comfortable with that. The bank did pay closing costs, something that was listed on the MLS sheet and it came with a 2yr home warranty, which is pretty useless since there were no appliances in the house.

Good luck!

Don't write that warranty off just yet. We too bought a foreclosure in August 2009 and it came with a warranty, which we renewed after a year because it was a good deal and we really don't know what we are dealing with on things in the house and guess what, I used it last summer when my hot water heater went. I got a brand new hot water heater for my deductible of $60 AND got same day service!

 

[Stacy's a freak]

I can't answer your question since it varies from one state to another - like a PP said. But I do want to emphasize that you do get the house "as is". That is very important to know. If you choose to bid, you are often contractually obligated to buy the house even if an inspector finds something undesirable. I agree that you should find a knowledgeable person in your area to help you out.

Good luck!

P.S. Please do not panic. Remember that if it is "meant to be, it will be". No amount of worrying or panicking is worth it. Just do your research and get a knowledgeable person on your side

 

[ADisneyQueen]

We bought our house right before it went up for auction. It had been a foreclosure and was listed w/ a realtor for several mos. and no one bought it. The auction date was advertised, but a few weeks before the auction date we made an offer and they accepted. It was less than what it had been listed for but probably more than they would get at an auction. We had to pay an auction fee to them b/c I guess they company had already spent money to advertise. So, have your real estate agent look into making an offer.

 

[Colleen27]

The process varies from state to state, so your best bet is to call a local real estate agent that has experience buying or selling foreclosures to answer your questions.

Here, an auction isn't used for the bank to finalize the foreclosure so properties going up for auction are being sold. The starting prices vary based on appraisals and sometimes just what the owner is willing to accept. The problem is that virtually all foreclosure auctions (tax foreclosures being a notable exception) have hidden reserve amounts so you can be the winning bidder but still not get an approved sale contract. We had that happen on one house we "won" and having the deposit money tied up was a nuisance.