Buying foreclosed homes

[ViviTheMage]

Is there a list or a way to know which houses are foreclosed on? How do you acquire them? Through a realtor, or direct with the bank? What about auction/short sale houses, are there lists for that too?

Everything I find online wants some money, so before I spend any on those services, would like to know which have worked for you guys.

 

[Tweak155]

Is there a list or a way to know which houses are foreclosed on? How do you acquire them? Through a realtor, or direct with the bank? What about auction/short sale houses, are there lists for that too?

Everything I find online wants some money, so before I spend any on those services, would like to know which have worked for you guys.

It's the same process as buying a house (in my experience) except it takes a lot longer. In our case, it took 5 months before we quit waiting after making an offer.

A lot of websites (I.E Trulia) will show you if it is foreclosed. In fact, I haven't seen a real estate website that doesn't when I think about it.

 

[ViviTheMage]

It's the same process as buying a house (in my experience) except it takes a lot longer. In our case, it took 5 months before we quit waiting after making an offer.

A lot of websites (I.E Trulia) will show you if it is foreclosed. In fact, I haven't seen a real estate website that doesn't when I think about it.

But who do you approach to make an offer, and how? Do I get a lawyer to do it? A realtor?

How about for auction homes? I assume those are a PITA and require a lot of information ready financially?

I also notice a lot of the foreclosures never have pictures, just an outside the house picture, is there any way to get a viewing, or inspect the house yourself first?

 

[Tweak155]

But who do you approach to make an offer, and how? Do I get a lawyer to do it? A realtor?

How about for auction homes? I assume those are a PITA and require a lot of information ready financially?

I also notice a lot of the foreclosures never have pictures, just an outside the house picture, is there any way to get a viewing, or inspect the house yourself first?

We put an offer through a realtor. I don't know about auction houses.

In a foreclosure situation, the bank owns the house. They aren't in a hurry to spend money on pictures. You can set up viewings through a realtor.

I suggest driving by any you might be interested in first. I probably eliminated at least half the houses I thought I wanted to see that way.

 

[ViviTheMage]

Thanks tweak, so zillow and the like are OK places for foreclosure listings?

 

[Fanatical Meat]

Vivi I bought a short sale home and its turned out great. When we were shopping we had tons of foreclosures in our queue.
There were a few decent ones however if you wait a rebuilder will swoop in and offer cash upfront/no inspection. You will never be able to compete with those buyers.
Pay close attention to big remodels that have not been completed its a sign that the job will cost more to finish than the home is worth. Kitchen and bathroom remodels tend to be expensive.
Good luck Vivi

 

[Fanatical Meat]

Thanks tweak, so zillow and the like are OK places for foreclosure listings?

Yes but honestly you want a realtor

 

[SearchMaster]

Usually the foreclosed property will be listed through a regular realtor or put up for public auction. If there's a particular property you're aware of that's been foreclosed, but it does not have a realtor sign, it likely is just stuck in a bank officer's queue somewhere. It is sometimes possible to find out who the bank/officer is and deal with them directly but unlikely (I know a guy who used to have a lot of buddies in the industry who would give him heads-up on such properties so he could buy them before they went public).

If the property is listed through a realtor, you should be able to get a showing. If it's up for auction, it's sometimes blind but not always (though you should get it for less money). And yes, the auctioned properties often require COD and you may have to pay a buyer's premium (5-10% above the sell price to offset the auction expenses).

Unless you are looking for a fixer-upper, find a crazy good deal, or have your heart set on a particular foreclosed property, I'd recommend going the traditional route because the potential downfalls offset the much greater risks to the buyer (IMO of course).

 

[ViviTheMage]

Vivi I bought a short sale home and its turned out great. When we were shopping we had tons of foreclosures in our queue.
There were a few decent ones however if you wait a rebuilder will swoop in and offer cash upfront/no inspection. You will never be able to compete with those buyers.
Pay close attention to big remodels that have not been completed its a sign that the job will cost more to finish than the home is worth. Kitchen and bathroom remodels tend to be expensive.
Good luck Vivi

Yeah, I am down for buying one, just trying to figure out the best way to actually find legit ones.

Yes but honestly you want a realtor

Why? Do they provide a different list of short sale/foreclosures? In the past they only provided a generated MLS based on a few requirements.

Unless you are looking for a fixer-upper, find a crazy good deal, or have your heart set on a particular foreclosed property, I'd recommend going the traditional route because the potential downfalls offset the much greater risks to the buyer (IMO of course).

Yeah, we're looking for a fixer upper! We've gone the traditional route a few times already so we know the process as well. They never mentioned forecelosures or short sales though.

 

[rudder]

Zillow lists foreclosed homes and your local newspaper will list all auctions.

 

[ViviTheMage]

Zillow lists foreclosed homes and your local newspaper will list all auctions.

Sounds like you need cash for all auctions, so that might be out.

 

[Tweak155]

Yeah, I am down for buying one, just trying to figure out the best way to actually find legit ones.



Why? Do they provide a different list of short sale/foreclosures? In the past they only provided a generated MLS based on a few requirements.



Yeah, we're looking for a fixer upper! We've gone the traditional route a few times already so we know the process as well. They never mentioned forecelosures or short sales though.

Because as you the buyer, there is no expense to you.

 

[Blackjack200]

You need to understand how the whole process works.

There are wrinkles in every state/city, but this is how it generally works:

When a person falls behind on paymens on their house, the bank will typically begin a formal process to try to bring the account current again, and warn the homeowner of foreclosure proceedings.

This is "preforeclosure". Many times, the homeowner will list the house as a short sale at this point, giving up on the idea of being able to remain in the house, but trying to limit the damage of default (most states are "recourse" states meaning that even after you lose your house the bank can come after you for any deficiency).

Eventually, the bank will be unable to collect, and the house will be listed for the sheriff's auction. Typically the bank will bid on the property up to a maximum of the outstanding loan principal (and the auction usually ends much lower than that). But not always. Sometimes the bank will just let it go to a bidder.

Here's an example of a Sheriff's auction: http://www.nj.gov/counties/mercer/officials/sheriff/informational/sale.html

Usually the bank wins the auction and retains control of the property, it is now part of the bank's Real Estate portfolio, and called a "REO (Real Estate Owned). They contract out with a real estate company to list their REO properties, and sometimes list them on their own websites. Here are some examples.

http://foreclosures.bankofamerica.com/real_estate_owned

My tip to you would be to learn exactly how the process works in your area, and then figure out what your best angle is. Some guys like the preforeclosures, they search for short sales or drive around putting those "Cash for Houses" signs everywhere. Some guys go to every sheriff's auction and know how to find a deal. Some guys develop a good relationship with a realtor and go after REOs. There's no one answer.

 

[waffleironhead]

Homepath.com shows all of fanniemae's REO properties.

 

[ViviTheMage]

Thanks blackjack and waffle, great info right there.

 

[DrPizza]

It's the same process as buying a house (in my experience) except it takes a lot longer. In our case, it took 5 months before we quit waiting after making an offer.

A lot of websites (I.E Trulia) will show you if it is foreclosed. In fact, I haven't seen a real estate website that doesn't when I think about it.

Not necessarily. When I bought my house on foreclosure, we were given 30 days to close.

Also, in general, foreclosure means you're getting the property "as is." No warranties, no, "could you replace the broken door?"

 

[Tweak155]

Not necessarily. When I bought my house on foreclosure, we were given 30 days to close.

Also, in general, foreclosure means you're getting the property "as is." No warranties, no, "could you replace the broken door?"

I've heard of other people with similar experiences, but overall it's rare.

 

[ViviTheMage]

Not necessarily. When I bought my house on foreclosure, we were given 30 days to close.

Also, in general, foreclosure means you're getting the property "as is." No warranties, no, "could you replace the broken door?"

Haha, that is fine with me.

Do foreclosed homes require specific mortgages? FHA, conventional, whatever?

 

[Tweak155]

Haha, that is fine with me.

Do foreclosed homes require specific mortgages? FHA, conventional, whatever?

Depends on the foreclosure. Real estate agent would know.

 

[Blackjack200]

Depends on the foreclosure. Real estate agent would know.

Yeah, IMO, the game is all about leg work.

Bank A won't give you a loan for a foreclosure? Call Bank B. Bank B want's 25% down? Call Bank C. Listing bank might accept only cash offers, might refuse a loan continency, might not permit FHA, might require FHA.

You win by outworking everyone else.

 

[NetWareHead]

Make sure your home inspector knows his shit. if you know someone in construction or has alot of common sense when it comes to home issues, bring him along to a house you are serious about and get his opinion.

This is a generalization but its fact in many cases I've seen. if you have no money to pay the mortgage, you probably wont have money to pay for upkeep, maintenance etc... Some less than savory people, knowing the looming foreclosure will scavenge the house of its copper piping, wiring etc... and sell for scrap if they know they are going to lose the place. I looked at a short sale where the defaulting homeowners didnt turn the heating system on all winter, before the property fell into foreclosure. Normally banks upon possession of a foreclosed property will winterize the water systems. Anyway so all of the plumbing ruptured. be a little more careful than usual when dealing with short sales/foreclosures.

 

[RearAdmiral]

I bought a foreclosure as my primary residence. Just went through a normal realtor, the only difference was that I had to pay more closing costs...PA has a 2% transfer tax that is normally split between buyer/seller. I just went on zillow and looked at all the foreclosures.

 

[MiniDoom]

I did an fha foreclosure. closed in about 60 days with 3.5 down. the only downside was the appliances where gone which I didn't mind because I planned to replace them anyways.

 

[Pantoot]

Haha, that is fine with me.

Do foreclosed homes require specific mortgages? FHA, conventional, whatever?

They don't require a specific type, but sometimes its tougher to do FHA, as the house has to pass an FHA inspection, and the bank isn't going to fix anything to bring it inline.

http://www.investopedia.com/articles/mortgages-real-estate/11/fha-minimum-property-standards.asp

For example, about 10 years ago I bought a foreclosure that had speaker wires exposed for the whole home audio. The FHA inspector said they wouldn't lend because it was hazardous to have exposed electrical. I bought a couple of wall plates and put the wires back in the wall and all was good.

 

[SMOGZINN]

Make sure your home inspector knows his shit. if you know someone in construction or has alot of common sense when it comes to home issues, bring him along to a house you are serious about and get his opinion.

Home inspectors are just a formality, and in reality all but useless. Even when you hire your own they know that they can't afford to piss off the realtors because if they do they will get blacklisted and realtors are where most of their business comes from. You are much better off finding someone that knows about home construction and paying him a small fee to look at it for you.