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[ADVICE] Buying a house in foreclosure

Discussion in 'BBS Hangout' started by London'sBurning, Aug 11, 2012.

  1. London'sBurning

    London'sBurning Contributing Member

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    So I'm looking to make my first home purchase. I got excellent credit. Over 20% for a down payment already for a house in my price range. I'm interested in one particular house that's in foreclosure. When I look to get more information on the house online all I'm directed to are websites that want to charge me to get the full details on foreclosure listings. It seems like a scam. With that said I do want to know if/when this house is going to go to auction or if there's any way I can track down which bank owns the home and if it's possible for me to purchase it before it goes to auction.

    As it stands I've no details on when the courthouse date is when it goes to auction or which bank owns it. Am I just going to have to keep up to date with online listings of that property or is there another way to check on its status?
     
  2. Blatz

    Blatz Contributing Member

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    Try calling some of the realtors in the area. They may know whats going on with the house and what bank owns it.
     
  3. franchise403

    franchise403 Contributing Member

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    As far as I know you can talk with an agent to get more details. You'll put in your best offer and the bank will mull over the deals and pick the best one in the time frame.

    I'm fairly certain that nothing can be done prior to the bidding. The bank will field all offers.
     
  4. cheke64

    cheke64 Member

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    Link to the house or gtfo
     
  5. BetterThanEver

    BetterThanEver Contributing Member

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    You can buy before the foreclosure sale, but you would buy it from the homeowner not the bank. If the house is vacant, you will need to find where the homeowner moved. You can ask the neighbors. In my first deal, I had to to go through over 100 prospects to find a deal that actually made sense. Back in 2006-07, banks weren't as willing to do short sales on underwater homes. The market was just coming down from it's peak. It might be easier nowadays, but they would rather deal with a cash buyer. I wouldn't get your hopes up on 1 prospect, though. If the owner already has the property listed on the realtor websites, it will be much easier to deal.

    It was my first and last deal. It was a good learning experience. Now I work with foreclosures and short sales every day for mortgage company.
     
    #5 BetterThanEver, Aug 11, 2012
    Last edited: Aug 11, 2012
  6. Pole

    Pole Houston Rockets--Tilman Fertitta's latest mess.

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    What BetterthanEver is talking about is often referred to as "pre foreclosure" where the owner is delinquent, but the bank hasn't actually foreclosed yet.

    Usually, once a bank has foreclosed, they will list it with an actual Realtor unless the house is so undesirable that they feel it will be too much trouble to sell through traditional channels; then, they will often put that place with an auction company. This also happens with super high-end places, but of course, the auction companies are vastly different.

    A lot of times--and this has happened with two of the foreclosures that I've purchased--a bank will have already foreclosed on a property, but it will not be on the market yet due to the fact that the foreclosing entity is trying to clear any clouds on the title. We just purchased a vacation rental type property in Montana, and it was foreclosed on over five years ago, but they just got title cleared recently, so sometimes, it's a matter of timing.

    However, and especially in today's market, the property could have clear title, and the bank just hasn't gotten around to listing it. It could even have temporarily slipped through the cracks. You can easily research basic present ownership title on the property by looking in the county courthouse. Many county clerks have at least their indices online, and quite a few even have their documents online, so you can often do your research from home. If not, a short visit to the county clerk will suffice, and the ladies behind the counter will often guide you towards finding what you need. If you've never done this before, it's good "life knowledge" to have, so don't be afraid to take the plunge.

    After doing a bit of title research, you should be able to find the current owner of the property. If the property has been foreclosed on, you'll need to speak with the asset manager at the bank. If it's a smaller, branch type bank, that will probably be the bank president. Ask to speak with whomever the asset manager happens to be--don't worry, they want to unload the property. Remember, it's still a negotiation though, so don't tell them you are only interested in this one property. Let them think you are researching several. Your main objective at this point is to start a dialogue with the property owner and find out if or when the bank is truly ready to sell.

    If they are ready to sell, but it isn't listed, you're going to need to think (and research) even more about price. Don't overspend, but remember, cash is king. If you are going to have to finance even a portion of it, be prepared and be pre-approved somewhere. Also, be prepared for the fact that somebody with cash might be able to swoop in, and take the place out from under you with a less desirable offer. It's just the nature of the beast.

    good luck. There's bargains out there, but it might take a little bit of extra work. Your savings "could" make that little bit of work be highly worthwhile though.
     
    1 person likes this.
  7. Supermac34

    Supermac34 President, Von Wafer Fan Club

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    You'll want to make sure there are not additional liens on the house.
     
  8. Prince

    Prince Member

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    there's a lot of negative vibes in a foreclosed home.
     
    1 person likes this.
  9. t_mac1

    t_mac1 Contributing Member

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    I bought a house last year, and was debating a foreclosed home. The thing that annoyed me about the foreclosed home is the timeframe that it may take for the bank to mull the offer, which could be a LOOOOONG time. It was really frustrating. But the good thing about a foreclosed home is that it is often much cheaper than market price. The house I was debating was on the market for 440k, put up by the owner. It was sold 7 months later (foreclosed) for 340k by the bank.

    But I would definitely get an agent and let them handle all the details. It's a lot of work buying a house, especially the right house.
     
  10. Johndoe804

    Johndoe804 Member

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    I've never actually bought a house being foreclosed on, but I've helped people do so as a mortgage lender. First off, the bank that foreclosed probably sold the mortgage to Fannie Mae, or Freddie Mac. You can probably look for information on a "hearing date" from them or also with HCAD. As for buying, you won't get much of a benefit putting more than 20% down. The excess down payment may be better to have on hand, or if that isn't the case, you may be better off having your lender structure the loan with you paying that excess as a discount fee for a lower rate, as the discount fee would be taxdeductible as an interest payment. Hope my advice helps.
     
  11. Johndoe804

    Johndoe804 Member

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    Also, Pole's advice is pretty sound. Pre-approval is a good idea to keep the ball rolling, especially because of the massive potential for title issues t slow the sale.
     
  12. Kim

    Kim Contributing Member

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    Are you in Houston? If you are, give me the address and I'll try to find out as much as I can for you or until I get bored or forget about this. You can PM or email me if you want...just let me know ITT if you're using PM.
     
  13. jae713

    jae713 Member

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    Foreclosure homes are a pain in the ass. I started my house search with nothing but foreclosed homes and got outbid three different times. :mad:
     
  14. 713

    713 Member

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    make sure nobody died in that house as well
     
  15. London'sBurning

    London'sBurning Contributing Member

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    It's in Austin. Thanks though. I already spoke with the neighbors about the house and it was a recent college grad that just decided to walk away from the house. I peaked inside the house and it's pretty nice. The previous owner didn't tear the place down or anything. It was built in 2010, has a moonwell, installed solar panels and is 3 bed/2 bath. So its a very green house which I like. It looks like the eviction notice on the front door was recent as well.
     
  16. Xerobull

    Xerobull You son of a b!tch! I'm in!

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    ewwww

    [​IMG]
     
  17. desihooper

    desihooper Contributing Member
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    Our house we bought last year was a foreclosed home. I'd echo some of the advice given in this thread already. Additionally, I think you need to be very patient, as someone might beat you to making an offer the bank accepts. At that point, you either keep looking or hope that they back away from the deal (which happened in our case). You could potentially pay much less for the house, so make sure you get the appropriate discount on your property taxes.

    I'd advise you to do as much research as possible on the home. See if you can talk to some of the neighbors to understand some history of the former occupants. Did they cause any trouble? Did they observe anything happen in or around the house (flooding/water damage, major repairs, etc.). Also, see if you can get with the local police to get a copy of any police reports filed at the address. You'll be surprised at what you might find! How long was the house vacant? Finally, get multiple inspections on the house. The money you might save on the upfront purchase price might need to be spent to fix minor (or major) problems once you take possession of the property.

    I think there is value in a foreclosed home, but you just have to do your research. In our case, even after some of the out-of-pocket expenses after we purchased the home, we're still in the black as far as the investment goes. G'luck!
     
  18. BetterThanEver

    BetterThanEver Contributing Member

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    The eviction notice would have been sent, after the title was transferred(foreclosure sale).

    I would check the real property records in the county office to see who owns the property. If the title went to somebody other than the bank, you can contact the new owner. The investor may flip the deal for a quick buck.

    If it went back to the bank, it will eventually be listed. You can have an agent set-up an email alert for the property. However, if the the listing agent markets the property to their friends as a pocket listing, you won't have first crack.
     
    #18 BetterThanEver, Aug 12, 2012
    Last edited: Aug 12, 2012
  19. London'sBurning

    London'sBurning Contributing Member

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    Well I checked public records and my bank owns the property. I guess no one bid on it when it went to auction. I'm going to go talk to them tomorrow after work.
     
  20. Xsatyr

    Xsatyr Member

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    As a real estate agent I advise you to get a Realtor who specializes or has experience with foreclosures. Also the website you are referring to is prob realtytrac; it's not a scam. It's just not worth it.
     

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