OT-buying a forclosure???

[Lisa_M]

Has anyone purchased a foreclosed home? How do you go about finding them? Did it save you alot of money? Are the homes generally in good or poor condition? I've tried CB's but they are no help so far on this topic and I don't know where to start. Any suggestions are greatly appreciated.

Thanks,
Lisa

 

[disneysteve]

Go to the library and pick up David Bach's newest book "The Automatic Millionaire Homeowner." He gives a lot of good info on home buying in general and does talk some about foreclosures.

 

[Lisa_M]

thanks, I will look into that

 

[bethsg]

We purhcased our home as a VA foreclosure in 1993. With a VA forclosure you get the person foreclosed upon's VA entitlement. You get VA financing, called Vendee financing through the VA. WHen we looked at the house there was no power on, and no water on, so we took a chance. You can't get an inspection, its sold as is, there is no title insurance, or title search etc... very simplified settlement. We felt ok with everything since we could tell the house wasn't very old, and there was minimal damage...overall it was a great experience, but you have to be willing to take a bit of a risk, since it's sold as is no warranty etc... Here is a link to the web site were you can find current listings as well as lots of details on the process.

http://www.ocwen.com/reo/reofindbystate.cfm

 

[ClarabelleCowFan]

We bought a foreclosed home about 5 years ago. The house is worth twice what we paid for it now.

There was a notice in the newspaper so my DH and my father drove by and looked at it. They walked around the outside of it and found out that the garage door was unlocked and so was the interior door from the garage to the house. They went inside the house (it had been vacant almost a year) and looked around. The kitchen had been remodeled recently and the rest of the home looked good.

The yard was very overgrown so I think that might have turned any other buyers off that drove by to look at it.

Yes you take a huge chance since you dont' know if the home has termite damage or mold or anything but we felt it was worth it.

DH and Dad went to the foreclosure auction and the bank that held the mortgage bid the starting bid and my Dad bid $1 over and WON!

There were a ton of people there to bid on the houses offered that day but no one was interested in that house. The house is in an upper middle class neighborhood on a huge corner lot.

Now once we moved in we found a ton of things that were wrong with the house BUT the house was termite free and all of the major things worked with the exception of the furnace which we had to replace.

When we won the auction we had to put down 20% at the time of our winning bid and provide the remaining 80% within 30 days.

Good luck!

 

[NCRedding]

I represent people who have bought homes from foreclosures. First, have a title search done BEFORE placing a bid. Foreclosing clears up some, but not all title problems, and in some cases, you might be buying the second mortgage, which is made subject to the first mortgage.

Second, people get very angry when they are being foreclosed, and often they take it out on the house. I've had clients who have purchased homes only to discover that the inside was gutted, or the electric box has been cut out, or the heat pump taken.

I;ve had other clients who have waited until the foreclosing bank puts the house up for sale--lots of time, it is less than when foreclosed, because banks hate to own property and will price it to sell. The closings are a pain because the foreclosing company is so difficult to work with.

 

[tyboyz]

We have been looking for a house since January and just cannot get what we want for the prices out there!!! So we have just begun to look into forclosure properties. I joined realtytrac and I will let you know how that seems. Any other sites that would be good to watch??

 

[Lisa_M]

We have been looking for a house since January and just cannot get what we want for the prices out there!!! So we have just begun to look into forclosure properties. I joined realtytrac and I will let you know how that seems. Any other sites that would be good to watch??

When I looked online for information, the wealth of it was on sites that you have to join and at this point, I didn't feel like giving out my address and phone number to agencies I'm not really sure are reputable.

Thanks for everyone's input. It's good to know the successes and pitfalls of this process.

 

[luckofthedraw]

I buy foreclosures/preforeclosures and rehab them for a living. It's very much a YMMV situation. There are houses that I thought no one would be interested in that "everyone" seemed to want, and houses that I thought "everyone" would want that no one bid on. So, you just never know.

First big piece of advise I can give you is to learn your state's foreclosure laws (process, length of time owner has to redeem his house, etc). Every state is different. Then learn the procedures for your county (where information is posted, etc).

Second advise is not to get attached to any one particular house. There are lots of them out there, and many more coming with adjustable interest rates rising.

The Register of Deeds has information that may be helpful. If you are serious about a house, you definitely want to pay and attorney/paralegal to do a title search, so you know what's "out there". Are you bidding on a foreclosing first or second mortgage, etc?

NCRedding is right about homeowners doing some damage. I looked at a 6500 SF upper-end house not too long ago. The homeowner had completely demolished the inside: sledgehammer to the walls, black paint on the carpet, cement down the toilets.... On the other hand, some houses are in mint condition. Just do the best possible research you can.

I wouldn't waste time with RealtyTrac. Their information is too outdated. Ocwen would be a good site for bank-owned houses. Lisa, PM me with where you are. Some areas have great pre-foreclosure info; some not so good; some non-existent.

Good luck! This can be addictive.

 

[MrsPete]

When my husband and I were engaged and were searching for a house, we looked at two foreclosures. They were no bargain. It could be that the two we happened upon were just bad deals -- two examples does not a pattern make -- but here's what we found:

One house had two mortgages, the other hand three; obviously the owners had tried to salvage their financial situation by borrowing every bit of equity they had in the house. The money owed on the houses was essentially equal to the value of the houses.

Both houses were in really, really bad condition. The owners apparently had known they were going to lose the houses, and they took no care of them. Or they'd been so short on cash that they weren't able to take care of them. One house was totally stripped of everything of value: curtain rods, towel bars, even the carpet had been ripped out. It would've taken significant money and effort to get these houses into livable conditions (and my standards aren't that high).

One of the houses was in such an ideal location (and just what we wanted) that we seriously considered it. We didn't go for it though because by the time we'd paid both mortgages AND fixed it up, we'd have been "in the hole". Also my husband -- then fiance -- admitted to me that he wasn't really all that handy with carpentry, etc. and we decided that we'd rather not start our marriage fighting about house details.

I'm not saying that you can't find a good foreclosure, but I think you'll have to look through a bunch of bad deals before you find a good one.

 

[Lisa_M]

yeah, this may not be the best idea for us, but I figure it's worth looking into. Thanks for everyone's input

 

[tyboyz]

Luckofthedraw, I thought realtytrac was up to date. I actually called a couple of preforclosure property owners and they confirmed the auction date but both were trying to postpone them to try and keep the property.

I guess I am not sure how to find the properties to investigate.

 

[nbodyhome]

It reminds me of HUD homes. I couldn't believe what people were buying HUD homes for, when I bought my first home. My first husband and I ended up buying a regular home, not HUD (it was actually cheaper and we knew what was working!)

 

[jaccceee]

The foreclosures in my area are listed in the Sundays paper, in the classified section.

 

[liswel33]

My husband and I bought our home 3 years ago. It was for sale by the bank through a regular realtor. It was scheduled for auction 2 days after we first looked at it and had sat empty for almost a year. We looked in the windows and called the number on the sign and had someone show us the house. We didn't know that it was a bank foreclosure as we were just driving by and saw the sign. For us buying the home was a very easy process. We offered, they counteroffered, we re-offered and they took it. 30 days later we closed on the house. The house had fresh paint and we were allowed a home inspection. They fixed the small problems that showed up on the inspection. Overall the house was in great shape. It doesn't look like (from the other posts) that finding a house in good shape is the norm but for us it was a blessing. The bank sold us the house well below market value and it has appraised for 65k more than we bought it for 3 years ago. Well worth it if you can find it.

 

[ohiominnie]

Second, people get very angry when they are being foreclosed, and often they take it out on the house. I've had clients who have purchased homes only to discover that the inside was gutted, or the electric box has been cut out, or the heat pump taken.

Or like the old neighbors we had who let their kids play hockey in the house just before they vacated. They also left ALL windows open (during the stormy summer season) and disconnected the sump pump. They also disconnected all of the downspouts so that water poured around the foundation. Who knows what else they did! I tried to call everyone I could think of to get someone to go in and close windows. We did reconnect the downspouts we could reach.

The mortgage company hired some other company to care for it and every 3 months or so they'd come out and pump out the basement. Water levels got to about 6 feet each time!!! It was a MESS.

It was vacant for about a year or so until a very nice family bought it and he's a general contractor and gutted the place and started over. You wouldn't recognize it now.

 

[fran99999]

Just an FYI RealtyTrac isnt all that accurate. I refinanced my house and they listed it as a forclosure. Why??? Even Chase Mtg was mystified. I was paid up by 3 months. As I was going away and the closing was going to take less time than we thought. I wanted to get some work done and the refi asked that either I dont start it until after or do it then refi. They refied right in the middle with the house torn apart. LOL

PS My house was a forclosure. I purchased in 1999 for $38,000 it was just appraised for $275,000. Yes work was needed and now it needs it again. Every house needs work. Even New ones to get set up to live in ie paint and such.

If U bid on a house always bid and $3 dollars or $13- an odd amount I won my house by bidding $38,003. the other bid was $38,000.

Best of luck also find a realtor to help U look at I did have a house inspection before I passed papers. I knew I would loose the downpayment but at least I wouldnt have been stuck with a lemon house.