Foreclosed homes?

Parent Cafe
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<p>Does anybody know anything about them? How do you find them? How do you go about purchasing one?</p>

<p>I’m just curious about how it works. My car had been reposessed prior to me owning it and I got it at a dealership for about 50-60 percent of what the price should have been. </p>

<p>My aunt and her husband recently got a divorce and he couldn’t afford their house and the bank foreclosed on it… and I remember her telling him that he should have tried to sell it quick for less money to get out before the bank took it, so I am sure there are houses out there that people are trying to dump off. How do you find them?</p>

<p>Is that risky?</p>

<p>Man I have so many questions, any input would be greatly appreciated.</p>

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<p>It is risky becuase they are sold as is and often you cannot see the interior or have any inspection done prior to buying it. Most towns have a few investors who are savvy and buy these things regularly. Some bargains but usually it an auction and they don’t give away good stuff. You can usually get a list of upcoming auctions from the county where the property is located.</p>

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<p>Another risk with foreclosures is that there often is no time for a title search, so you could end up owning a house that has liens against it. Do be very careful. This is not for newbies. (We would love to buy a foreclosed home, but are chicken about it)</p>

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<p>The houses around here that I know of that have been foreclosed are a rats’ nest of trouble, and they don’t necessarily go for cheap.</p>

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<p>Fendergirl, we are doing some research into real estate investing as a second career for my husband, so I have just enough knowledge to be dangerous!</p>

<p>Foreclosure investing is not as clear cut as buying a repo car, with of the important pitfalls being what Chocoholic mentioned - liens. Foreclosed homes also have “right of redemption”, the terms of which vary from state to state. That means that even after you have “bought” the house, the original owner can redeem it, buy it back from you and the bank. There are several steps during the foreclosing process, and you can buy the house at any of those steps, with its own set of pitfalls.</p>

<p>The “Dummies” series of books has a couple of good books on this topic. I wouldn’t recommend them as a sole source of information, I would consult a real estate agent, and perhaps your banker or accountant as well, but you can learn enough to speak intelligently.</p>

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<p>I don’t know much about the subject, but have a story to add: A family friend bought a foreclosed house (one of those deals where they couldn’t see the inside). The outside was in bad shape and needed a lot of weeding, etc. But, the inside ended up being so trashed that it needed paint and new carpet in every room, plus lightbulbs (they were all taken!), and some applicances. They were a lot of unplanned expenses.</p>

<p>It sounds like a cool idea, but definitely look into it in detail. Best of luck!</p>

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<p>Have you seen the stunning and tragic movie “House of Sand and Fog”.</p>

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<p>A house can be foreclosed upon by the holder of the 1st mortgage or (if there is more than one mortgage) the holder of the 2nd or 3rd mortgage. Depending on who forecloses, the purchaser may need to pay off the other mortgages in addition to what s/he is paying for the house at foreclosure auction. You need to be very savvy to know how to figure these things out.</p>

<p>As others have said, there are risks as to the condition of the house. Foreclosure “victims” are often disgruntled and trash the place upon leaving, even if they previously took good care of it.</p>

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<p>I found a website where there are people who are in danger of being foreclosed and they are listing their houses that way you can buy it from them before the bank does, that way they at least get something out of the deal and it’s not on their record. I know that’s what my aunt told her ex-husband to do but instead he didn’t listen to her and the bank wound up taking the house… She estimated that he lost out on about 30k by doing it that way.</p>

<p>I mean, i’m not really planning on doing it or anything, just was trying to get some information on it. If it was as easy as a car I guess everyone would be doing it. :)</p>

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<p>The way I see this is that buying a foreclosed or other ‘bargain’ house is not for the person who is investing their life savings and hopes to have a bargain place to live. </p>

<p>There are way too many people out there who are right on top of the market and the new listings and can do their own inspections and don’t need to arrange financing and have the contacts for renovation and marketing at their fingertips. </p>

<p>If you aren’t one of them … in other words if you don’t have the expertise and the liquid assets … it’s probably not going to work.</p>

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<p>I’m not sure I’d advise buying a foreclosure as a first house, but we are living in a success story…this is our 7th house over the past 24 years, and our first foreclosed property that we’ve purchased. We’ve been here almost 3 years.</p>

<p>I’d never advise buying a house without being able to see it in detail. Also, our attorney did much more than any of our previous real estate attorneys had to do. Because we were negotiating with a bank across the country, the time of negotiating a price back and forth was lengthy–about 2 weeks, I think. During that time, the attorney had one of his legal clerks go to the county offices—here in NC, there are several steps in a foreclosure; he advised that the most straight-forward process would be if the foreclosure was in its final stage. (if it was earlier in the process, the original owner would have something like a 45-day period in which to settle the outstanding debt and re-take ownership of the house.) Since we were moving from out of state, that was a period of limbo we weren’t willing to take. Luckily this one had passed its final hurdle, and at the easiest point for the buyer to deal with. It also had the advantage that the bank had it for about 6 months, so they were more willing to go down in price than if it was still early on.</p>

<p>I’d recommend using a realtor. Often, they can get the “scoop” on the house, and may have a lot more contacts for inspections, etc. We didn’t do the standard run-of-the-mill inspection (because, yes, the purchase was “as is”, and the legal things we had to sign in the “offer” stage were pretty scary). Our inspection was comprehensive—there were separate tradesmen who did their own thing—an electrician, a plumber, a carpenter, an HVAC guy, a termite/bug guy. It was considerably more expensive than Joe Blow the inspector, but we’ve never had anything near this level of inspection on a house we bought. We went in knowing every detail of everything that might need action on our part. </p>

<p>We also introduced ourselves to the neighbors, who were glad to give us the nitty-gritty details of what they knew of the previous inhabitants. We suspected, from what the realtor had found out, that there were some shady dealings involved with the house—original owner was part of a real estate scam in town, and he “rented” it out to some people who had questionable comings and goings. Realtor found out, and neighbors confirmed that the previous “renters” had moved out in the middle of the night, shortly after neighbor saw one of their cars being repossessed.</p>

<p>So, this is my long-winded story. Bottom line, we got the house for MUCH less than it was built for (on tax records) 3 years before. It was a custom-built house and really very well done. Other than a few repairs, everything we did to it after moving in was cosmetic. It has appreciated hugely in the 3 years we’ve been here. (we estimate it would list for about 40% more than we originally paid for it). However, we went into it with our eyes WIDE open, had 6 previous houses and their “issues” as experience for things to look for, and we were lucky to find a house in such great shape. (although not searching for a foreclosure, we did see a couple of others that were really, really bad…holes punched in the walls, windows broken, floors completely trashed, etc.)</p>

<p>The worst part of our process, was that following our moving in, we got (and still receive) obvious collection notices from companies and nasty-grams from the IRS for the old owner and tenants (I’ve had heated conversations and snippy notes for the mail carrier to stop delivering them to us). The cable guy said that they left a $2,000+ bill (how in the world that happens, I can’t figure out), so they went through a bunch for us to prove that we were really new people who had moved into the house before they’d hook us up. The old tenants obviously did not leave a forwarding address anywhere, and about 3 months into living here, a dude showed up with a tow truck, poised to reposses a new car that they had purchased. We also got an influx of postcards and mail from personal injury lawyers after the lady had an accident a year or so back (so, obviously she didn’t change her drivers license). </p>

<p>So there’s my story, as if you wanted to hear it :)</p>

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Our current house needed all that, well maybe not the lightbulbs and we’d seen the inside! That’s the cosmetic stuff. The big expense comes when you start replacing wiring and boilers… However we knew what we were getting and I think because our house looked so ghastly the price wasn’t what it could have been. Imagine pink wall to wall carpet, stained with cat urine, pink walls, pink curtains in every single room except a few which had cheesy fake wood panelling. It was astoundingly ugly. But underneath was a solid house with oak floors, good sized rooms and a wonderful neighborhood. I’ve always been way too chicken to buy at foreclosure.</p>

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<p>My son’s friend got a great deal on a house that was going to be foreclosed on. The owners did not want the foreclosure to happen so they sold for what they could get before the bank took action. I think he just stumbled on this in a “for sale by owner” ad. He has had the house about a year and has done some repairs. Other houses in neighborhood that are similar are selling for so much more that he is considering looking for another good buy and flipping this house.</p>