please school me on foreclosures

[mandysbus]

I guess this would be budget related... looking for an affordable house and hear that foreclosures may be a way to go, but I've never owned my own home and know nothing about buying auction or foreclosed property... every website I come across wants me to pay to use their search and I'm kinda iffy about handing my credit card info to any of these sites... hoping that some of you may be able to shed some light. Any tips would be greatly appreciated.

Thanks! mandy

 

[Stumpy]

While I have owned a few homes, I've never purchased a foreclosed one. However, real estate agents have access to this sort of information and do not charge for their services. Their commission comes from the seller, not the buyer.

The agents have exclusive access to search tools and can help you select a home that meets your needs and fits within your criteria. I would definitely not pay for any of the listings of foreclosed properties.

Also, there are many homes in pre-foreclosure that may be listed for short sale. Basically, before the home goes into foreclosure the bank may be willing to negotiate a price that is lower than what the current owners owe. It's a loss for the bank, but they can sell the property and take a smaller financial loss than they might by having to go through the entire foreclosure process.

 

[princessdi81]

I guess this would be budget related... looking for an affordable house and hear that foreclosures may be a way to go, but I've never owned my own home and know nothing about buying auction or foreclosed property... every website I come across wants me to pay to use their search and I'm kinda iffy about handing my credit card info to any of these sites... hoping that some of you may be able to shed some light. Any tips would be greatly appreciated.

Thanks! mandy

I'm not sure where you are from, but I work in real estate with foreclosures in particular. Go to www.hmbiweb.com and see if there are any listings in the state in which you live. They have mainly HUD foreclosures, which, a lot of time, need a bit of work. But, you can get some really great deals. Don't ever pay to use a search. You could also call a local real estate agent and they have access to foreclosed properties, as well. Whatever you do, make sure you buy title insurance!!! This will protect you if for some reason, you get bills from the former owner, etc. The title company will do a title search, and pay any outstanding bills, but they can still pop up at any time - these liens or bills can be hundred of dollars or more! PM me if you have any questions!

 

[MercoBear]

We just finished buying a foreclosed home, and used a real estate agent to do so. We had problems with the title company that the bank was using, because we did not get to pick our own title company. They did not start doing any of the work (like sending out HOA required forms that take 7-14 days) until we called them a week before we had to close. And they refused to set a closing date till they had everything received. I don't know if this was the specific title company, or foreclosure policy, but it was a complete mess!

 

[princessdi81]

We just finished buying a foreclosed home, and used a real estate agent to do so. We had problems with the title company that the bank was using, because we did not get to pick our own title company. They did not start doing any of the work (like sending out HOA required forms that take 7-14 days) until we called them a week before we had to close. And they refused to set a closing date till they had everything received. I don't know if this was the specific title company, or foreclosure policy, but it was a complete mess!

That's a title company policy..title companies cannot issue a title commitment until they have all the necessary information, likewise, they cannot schedule a closing if they don't have the commitment, and they can't issue a commitment if they don't have clean title. I woulndt' say that they didn't start doing the work until a week before it closed, there's A LOT of work that goes on behind the scenes that people aren't aware of. Running title searches, trying to get copies of bills, etc. Foreclosed homes take A LOT of work to prepare!!!! Also, when you are dealing with a foreclosed home, there's a middle man that the title company has to go through in order to get things approved - often times that is where the hold up is.

I work for a title company company, so I know how these things go...

 

[Colleen27]

We've bought two, and both were good deals that came with some headaches.

NEVER pay for foreclosure listings. If you go to Hud.gov, you can get to a list of FHA foreclosures for your state. Also, use the MLS through a free site like Listingbook.com and look in the ownership field for those that are bank owned. And if you're working with a relator, they'll have access to foreclosure resources as well.

Keep in mind that with a foreclosure, you're buying the house as-is with no information about what repairs have been done or might be needed. Also keep in mind that the clean-out and winterization companies that many banks/agencies are using are not the best and brightest, and that can cause problems (As an example, our boiler needs replaced because it wasn't drained properly when the house was winterized). Make sure you have an in depth inspection done by an inspector with a good reputation before making any offers.

The offer process is a little different with foreclosures too, because you're not dealing directly with the home's owner. Some banks set an absolute minimum that the listing agent is aware of. Others look at every offer, which can take some time. In our experience, there's no back-and-forth of offer to counteroffer. Either your offer is accepted or rejected; you're free to make another offer, of course, but they don't give you anything to work with as far as what kind of offer they might be willing to accept. And of course there are no contingencies, so a good inspection is absolutely vital.

Closing issues can crop up too. The agency we bought the house we live in now from only uses one specific title company for the entire state, and they are super backed up. Our offer was accepted in March and we closed in July.

Auctions are a whole different creature than listed foreclosures, and have their own drawbacks. In most cases, the banks that own the auctioned properties have to accept the high bid, and that can take several weeks. So you attend the auction and if you're the high bidder, you leave a deposit in the form of a cashiers check, which is then tied up for sometimes as long as 3-4 weeks while waiting for the bank to make a decision. We attended one auction and decided it wasn't for us, after having $5000 of our money tied up for a month only to have the bank reject our bid.

Good luck! The foreclosure market can be a great place to get more house than you could otherwise afford, as long as you go into the process with your eyes open and don't mind the hassles and delays involved.