Buying a foreclosed home

Crystallas · #1 (**permalink**) 08-15-2006, 01:24 AM

Im not trying to buy and sell properties like all of these get rich quick real estate plans. Im interested in buying a house for myself that has been foreclosed.

But I see that its a tricky subject with many rules applied. So I am wondering if anyone has any advice on how to do this. I recently found 2 homes that I like very much that are Lis Pendens and Im keeping an eye out for them.

After they foreclose, I contact the loan holder, then what? I have no ideas as far as what to expect.
Do I need to buy something to view information about the home, or is this information free, but sold to those who dont know how to gain access to it.
Do I buy the house linke a normal house, or do I go to a physical auction to buy it?

I really have no idea how they work. As keen as I am with investing, this is something I'm very lost on.

autoxer · #2 (**permalink**) 08-15-2006, 05:17 AM

I'm no expert, but I have read a little about foreclosures. You should look for a buyers agent that has experience with the foreclosure process. The best deals are made pre-foreclosure, so the seller can get out from under the mortgage without ruining their credit, the lender doesn't have to go through the process of foreclosure & the buyer gets a discount.

PrincessPerky · #3 (**permalink**) 08-15-2006, 06:39 AM

If you wait till after be wary of people who don't like getting kicked out, a nice house can be trashed in one beer bash last night party....

34saving · #4 (**permalink**) 08-15-2006, 08:41 AM

Autoxer is right that pre-foreclosures are the way to go if you can, but finding them can be tricky and lots of banks aren't as willing to negotiate as you might think. (IE, if the house is in pretty good shape they think they can get full market value.) The best way I know to find these pre-foreclosures (in my market at least) is to have your agent do a search a under "agent remarks" for "bank" or "corporate". If the sale requires "bank approval" it's probably on the market as a short sale (pre-foreclosure).

In the meantime, that same search (also search for "as is" and "as-is") will bring up most of the foreclosures that are back on the market. These will be listed with agents that will know how to sell a foreclosed home. It seems there are some that do nothing but that. Don't touch the courthouse steps with a ten foot pole. It's not a place for novices. Trying to contact the bank directly after the foreclosure but before the house is listed might work, but in my experience the banks have their way of doing things (listing with agent x) and anything out of the ordinary doesn't work even if it saves them money. Of course, it's worth a shot

Princess is right that many of the foreclosures you look at will be trashed. Learn to look beyond the stuff that's cheap to fix and you might just get a deal.

lillyb · #5 (**permalink**) 08-15-2006, 09:35 AM

We bought our house that was a foreclosure house. It sat empty for over a year, some sort of waiting period. When we sold our other home we started looking, and just so happened that day this house went up for sale. It was being sold by a local real estate agent for the company that foreclosed on it, the local agent was a broker, if you will.

The foreclosed company only wanted what they were owed, so it was going for a steal at 69k. As luck would have it, we viewed it that first day and put in a bid... along with 2 other people. So we had a bidding war, yee. A sealed price bid went to the foreclosed company and they went with the best deal, ours. We offered 4k over asking price without contingencies (we paid 73K, the house was appraised over 90k and we had pre-approval)

Everything else went like a regular home sale.

Now, one of my sis's bought her home pre-foreclosure. She heard from someone about this lady who was about to lose the home, the husband left her, she moved out, it had sat empty for 3 months and they were about to foreclose. My sis hunted her down and offered to pay her a few thousand over what she owed (getting the some cash and removing her from foreclosure). The lady got with the mortgage company, my sis got loan approval and her bank took care of most of the 'goodies' of the paper process. It was kinda a pain in the rump, but it was done and at thousands below what the house could have been bought for.. I'd say $30,000 below what it was worth. The lady just wanted to be rid of it, too many bad memories, and the mortgage company just wanted their money. That one was only found word of mouth, so not sure how else you go about it, just thought I'd pass along two foreclosure stories.

Crystallas · #6 (**permalink**) 08-16-2006, 12:04 AM

Quote:

Originally Posted by lillyb

We bought our house that was a foreclosure house. It sat empty for over a year, some sort of waiting period. When we sold our other home we started looking, and just so happened that day this house went up for sale. It was being sold by a local real estate agent for the company that foreclosed on it, the local agent was a broker, if you will.

The foreclosed company only wanted what they were owed, so it was going for a steak at 69k. As luck would have it, we viewed it that first day and put in a bid... along with 2 other people. So we had a bidding war, yee. A sealed price bid went to the foreclosed company and they went with the best deal, ours. We offered 4k over asking price without contingencies. (the house was appraised over 90k and we had pre-approval)

Everything else went like a regular home sale.

Now, one of my sis's bought her home pre-foreclosure. She heard from someone about this lady who was about to lose the home, the husband left her, she moved out, it had sat empty for 3 months and they were about to foreclose. My sis hunted her down and offered to pay her a few thousand over what she owed (getting the some cash and removing her from foreclosure). The lady got with the mortgage company, my sis got loan approval and her bank took care of most of the 'goodies' of the paper process. It was kinda a pain in the rump, but it was done and at thousands below what the house could have been bought for.. I'd say $30,000 below what it was worth. The lady just wanted to be rid of it, too many bad memories, and the mortgage company just wanted their money. That one was only found word of mouth, so not sure how else you go about it, just thought I'd pass along two foreclosure stories.

Thank you, thats more of what I was looking for.

Jaynen · #7 (**permalink**) 08-19-2006, 11:23 AM

Make a relationship with someone at your local bank, there's always someone going into foreclosure. It's true that if there's equity and the house is ok, they won't be so willing to deal with you; but if you can get through to the current owner then you're golden with the pre-foreclosure opportunities. Pre-foreclosure you should not be talking to the bank (well, unless you're sure it's going to foreclosure); it would be creating an unnecessary negotiation. Pre-foreclosure you want to talk to the borrower, find out what's going on, if they even want help (you to take the home off their hands), and what they want (if they want some kind of cash). Those are probably going to be your best deals, unless you find a good short sale (home with little equity that the bank is willing to sell at a discount, think about 80%).