buying a foreclosure at auction

[slag]

Found another home just on the edge of town in what I would consider the country. Has 6 acres, a small pond, two decent sized outbuildings as well. One has two single bays with garage doors and an upstairs. The other is more of a small barn. House is 5 bedroom, 4 bath, built in 1972. It's a foreclosure, the previous owner passed away last year. I drove out by it and the grass is all grown up almost waist high and there is some junk around the house -- old grill, some bikes, etc..

The house is going to sell at auction at the end of this month. I found out who owns the mortage and they are based out of Texas but I can't get ahold of anyone in their foreclosure department. I really want to take a quick look inside to see if its even worth trying to buy. I have a fear that the basement might be full of water and/or it has sat all year and pipes have frozen, etc., but I really don't know.

Payoff is around $155k. County appraised the land and property at $285k. I'm at a loss as to how I can get inside to take a quick look around. I think I can go to the county clerk and see who is all listed on the title. I know the deceased has a sister who lives in town who might have a key to the place as well and I can hopefully track her down. Is this getting too creepy or is this how it has to be done to make an informed decision on the place? I know the mortgage company won't sell it for less then they have in it. Plus, after it sells, redemption rights come into play which can be messy. I have two weeks to get more information on this place. I'm tempted to drive out to the property, talk to some neighbors, and peer through the windows to get a look at the place.

It has mostly everything we wanted originally. High speed internet, is in the correct school district, a little water on the property, some trees, room for my boat for storage, and I can go outside and shoot guns on a practice area I will set up, and space even if it is just a few acres.

 

[maddogchen]

I'm tempted to drive out to the property, talk to some neighbors, and peer through the windows to get a look at the place.

Go do that now....

 

[Scarpozzi]

Yeah...do some recon. If you can get the previous owner's name from the tax record, you may be able to follow up and see what they did for a living, etc... That will help establish whether or not you believe they maintained the residence adequately...somewhat arbitrary assumption, but your decision will be based on a lot of assumptions.

Also, if you do get to look inside...try to notice if they did any remodeling. If you think they did it themselves and things may not have been handled by professionals, consider that some things may not be up to code.

 

[mizzou]

at that price, might be worthwhile to just demo the entire thing and build new!

 

[DrPizza]

Common biggies: well, septic (unless on city water/sewer), and condition of roof. IMHO, the majority of the other repairs are fairly trivial (or relatively rare, e.g., deteriorating foundation). After that, and at the price difference from assessed value, it's mostly cosmetic. Tossing in a couple thousand to fix some plumbing or electric is small stuff in that price range and potential savings.

 

[slag]

Well, our house is not yet ready to market and the terms of this auction are that I have 2 hours to pay for the house if I win it, so its not going to work out. I can only hope the mortgage company wins the auction and then I can work with them on taking a look and spending a bit more, but buying it from them with knowledge of the residence. I'm still going to go out tomorrow and look at this house after work and look around a bit more.

 

[slag]

Here's a couple photos of the property. The building directly behind the house has two garage bays in it and steps that go up the side to a door on the second story.

 

[DrPizza]

Well, our house is not yet ready to market and the terms of this auction are that I have 2 hours to pay for the house if I win it, so its not going to work out. I can only hope the mortgage company wins the auction and then I can work with them on taking a look and spending a bit more, but buying it from them with knowledge of the residence. I'm still going to go out tomorrow and look at this house after work and look around a bit more.

Is this a mortgage foreclosure auction, vs. a tax auction for unpaid taxes? I'm sure it varies by market, but in this area, quite a few houses are "auctioned off" for foreclosures. But, they have a minimum bid. A house down the road from me finally went up for sale a month or so ago; I've been considering buying it. They had an auction for it, and according to the neighbor, the minimum bid was $55,000. I thought they must be nuts. Zero bids. According to that neighbor, the price of the house is now $25k. When they dropped it that low, it made me figure that there's a problem with the septic and/or well. I cannot find it on realtor.com; but the for sale sign is still there. Anyway, the point is that just because it's up for auction, doesn't 100% mean it's going to sell at auction.

 

[slag]

Mortgage foreclosure. Owner is only person on title and she passed away early last year. House has been vacant for a year. Mortage company is trying to get their money back.

 

[cabri]

Well, our house is not yet ready to market and the terms of this auction are that I have 2 hours to pay for the house if I win it, so its not going to work out. I can only hope the mortgage company wins the auction and then I can work with them on taking a look and spending a bit more, but buying it from them with knowledge of the residence. I'm still going to go out tomorrow and look at this house after work and look around a bit more.

How is the mortgage company going to win the auction?

They will have set a minimum acceptable (reserve) and if anything hits, it will go.

Or do you expect that there is a target that they will try to up the bid above the reserve?

Best to start calling at the bank and getting names/position. Work as high up as you can go even if it is in a different department - possibly the mortgage department

Once you get to a VP level; then they should be able to get you the foreclosure big shot.

Any luck on locating the sister.

 

[slag]

How is the mortgage company going to win the auction?

They will have set a minimum acceptable (reserve) and if anything hits, it will go.

Or do you expect that there is a target that they will try to up the bid above the reserve?

Best to start calling at the bank and getting names/position. Work as high up as you can go even if it is in a different department - possibly the mortgage department

Once you get to a VP level; then they should be able to get you the foreclosure big shot.

Any luck on locating the sister.

My hope is that no one else is interested in the property and no one bids above the mortage company. I've already tried calling my way up the chain. I've gotten hung up on after not talking to anyone beyond the automated system 3 times and wasted 42 minutes with that already. I can't ever ever ever get ahold of anyone real at this company (Nationstar).

No luck on the sister.

 

[jaedaliu]

The mortgage company already owns the house.

I haven't looked that much because I'm not ready to buy yet, but the auction listings I've seen have an inspection period or agent that will let you look around.

My brother in law put in an offer on a foreclosure once. The title holder took it to auction, and it sold for less than his offer. So he found out who bought it, gave them the same offer, and he got the house. Even if someone buys it at auction, you may still be able to get the house at a decent price.

 

[zardthebuilder]

what does your wife think about buying a foreclosure?

 

[cabri]

Send a registered letter to the bank, attention "Foreclosure department" indicating that you are interested in the property but you have not been able to talk with anyone regarding it.

 

[slag]

The mortgage company already owns the house.

I haven't looked that much because I'm not ready to buy yet, but the auction listings I've seen have an inspection period or agent that will let you look around.

My brother in law put in an offer on a foreclosure once. The title holder took it to auction, and it sold for less than his offer. So he found out who bought it, gave them the same offer, and he got the house. Even if someone buys it at auction, you may still be able to get the house at a decent price.

You are correct, they already own the house, kind of, but they will also be putting in the first bid on the house at what they have in it or perhaps slightly higher to recoup legal fees, taxes paid, etc. This is how its done. There's no way I will be able to inspect the residence as the now deceased person is still on the title and legally owns it and the mortage holder is not local.

 

[slag]

what does your wife think about buying a foreclosure?

That is a great question. She is apprehensive. We really would like to look more inside at the place, however, she and I both grew up in the country and are comfortable with the challenges associated with it. I told her worst case scenario, we could always get a trailer and live in it for a few months while we made the home livable. Yeah.. she didn't like that answer.

 

[Uppsala9496]

Where I live for auctions, it is sight unseen. Can not enter the premises or have any appraisals done etc. And cash due within 24 hours of winning the bid.
Personally I think that is a little crazy.

I've found that most times there are no bids and the bank eventually lists them on the open market for less than what the opening bid was.

I was looking at a house a month ago that went up for bid with an opening at $869K. On the market at $354K after no one bid on it. In my opinion after visiting it, it isn't worth any more than $225K due to the amount of work needed (minimum of $100K).
Homes in that subdivision are selling at $425K - $500K and are move in ready.
So obviously a bit of a disconnect with the bank. They are trying to recoup as much money as they can and are willing to let it sit vacant.

 

[cabri]

Where I live for auctions, it is sight unseen. Can not enter the premises or have any appraisals done etc. And cash due within 24 hours of winning the bid.
Personally I think that is a little crazy.

I've found that most times there are no bids and the bank eventually lists them on the open market for less than what the opening bid was.

I was looking at a house a month ago that went up for bid with an opening at $869K. On the market at $354K after no one bid on it. In my opinion after visiting it, it isn't worth any more than $225K due to the amount of work needed (minimum of $100K).
Homes in that subdivision are selling at $425K - $500K and are move in ready.
So obviously a bit of a disconnect with the bank. They are trying to recoup as much money as they can and are willing to let it sit vacant.

If they let it sit with 2-4K of repairs/maintenance/taxes etc a year and 5 years the market gets back 50-100K, they will be ahead of the game from their beancounter POV.

If a property is foreclosed at 800K and they get less than half; someone's head would be on the chopping block. Especially if this happens a few times.

 

[tsiunltdus]

Hopefully if it has been vacant for a year. The water lines were winterized. Otherwise could be looking at a big mess to repair.

 

[slag]

Where I live for auctions, it is sight unseen. Can not enter the premises or have any appraisals done etc. And cash due within 24 hours of winning the bid.
Personally I think that is a little crazy.

I've found that most times there are no bids and the bank eventually lists them on the open market for less than what the opening bid was.

This is what we are hoping for. At least we can make an informed decision if we can then look at the place once the bank owns it free and clear, but before they list it with a realtor.

 

[cabri]

Listing/selling through a realtor is going to cost them 3-5% of the selling price.

If you can let them know that there is interest before it gets to that step ...

As stated early, send that registered letter.
At most you will wast $5 and 30 minutes of your time.

 

[mizzou]

im curious how this works out..from my understanding its difficult to work with huge banks on sales. they are built to operate at high speed on the foreclosure sale auctions. Its nothing similar to the typical home sale process.

 

[slag]

Cabri.. we are going to do that this weekend.

 

[zardthebuilder]

That is a great question. She is apprehensive. We really would like to look more inside at the place, however, she and I both grew up in the country and are comfortable with the challenges associated with it. I told her worst case scenario, we could always get a trailer and live in it for a few months while we made the home livable. Yeah.. she didn't like that answer.

based on what you have shared in the other thread, i think the odds of you buying this foreclosure are slim to none.

 

[slag]

based on what you have shared in the other thread, i think the odds of you buying this foreclosure are slim to none.

I don't disagree. I won't bid or win this auction as I don't have the money to bring to the table right now. I need to sell my home before buying another. What I will find out immediately is if the lender retains the mortage and a possible contact if my registered letter goes unanswered.