Anyone know anything about buying foreclosed homes?

churchy

If so, could you please hit me via PM?

brew · Posted: Feb 08, 2008 4:29 pm Post subject:

PM sent

Tyler T · Posted: Feb 08, 2008 5:47 pm Post subject:

Why PM? This could be a good thread topic.

churchy · Posted: Feb 08, 2008 7:03 pm Post subject:

OK, here is the question..

I would like to take advantage of the market, so I have been looking into a lot of short sale stuff. So, I am pretty boned up on that. However, I have recently found a property that is already bank owned. Auction is set for sometime in April. So, I have a couple of questons.

1.) Can I still make the bank an offer before auction. I am pretty sure I can.

2.) The house was just listed at $1.6M. The house only has a 1st on it, and it is at $990K ish... I know in these situations, the bank will take less than they are owed to get something out of it, but can I really offer like $700K on a $1.6M house and expect to get anywhere?

Thanks.

Dragonlady8 · Black Widow Joined: 27 Aug 2004 Posts: 9198

So you've also check to make sure there aren't any liens against the property as well?

RampageWake · Posted: Feb 08, 2008 7:47 pm Post subject:

The banks I have bought houses from wanted cash. (in the last RE "crash" circa 1990) Once they have taken it back you may be able you get it with conventional lending from them or another lender, but I doubt they'd stop the auction for less than their 1st. It will probably open for what the first is, and obviously the pro's at the courthouse already voted that it wasn't worth that, so the bank is hoping some consumer thinks otherwise.
When I have been to the courthouse steps on the first Tuesday of the month, you have to have a cashiers check made out to yourself for the amount you bid. There's a lot of junk at the auctions as well, and like D'lady says, make sure you get an opinion of title before you buy, because many (most) do not qualify for title insurance.
IMO, if you have cash, the best deal is at the courthouse. Every property listed as a foreclosure you could have bought cheaper there before it was listed.

brew · Posted: Feb 09, 2008 6:40 am Post subject:

1. You can always make the bank an offer. Cash offers are always better than financing offers, because banks don't like to hold up everything and wait for you to get financed. Most of the deals I've done they want to close in 5-7 days from the contract date which doesn't leave time for a lot of the things needed for financing. They also will generally move towards an offer that has no stipulations (home inspection, financing, etc.) and will go with the offer that says I will show up with a check on this date.

2. The bank has a built in cushion on the loan of at least 30-50% for a write off already if they have foreclosed. Bank examiners require them to set up a loan loss reserve no matter what the market value is in most cases. You should make them an offer and see where it goes. They may counter or they may reject, but you can always write another offer tomorrow. Banks are generally not looking to make money on foreclosed property because they want to minimize their carrying costs and they don't want the trouble. This may be a property that they see a way to make money on though, since the market value is so high. It's hard to say. I'd talk to an agent and get their feelings on the property.

I've generally stayed away from auctions and gone strictly with foreclosures that real estate agents have listed. I have two agents that let me know what's on the market and we bid accordingly. I generally base my offer on the market value less renovation costs less a cushion on the costs less what I would like to make on the property. That's my starting point and then we go from there.

You should be very careful on a property that has a high discepancy between market and loan value. Generally that means there is something wrong with the property and someone has walked rather than fix it. On this one it looks more like someone's finances went bad and they couldn't afford the payments, but be prepared for the unexpected on repairs.

One other thing, if you can't afford to carry it for 6 months+, don't buy it. You never know what the market is going to do and at that price, you are playing in a high risk area. Most of my flips have been at the low end of our market, because they could be bought, fixed, and sold in a matter of a couple of months.

As far as the courthouse goes, check in to your state laws. In TN when you buy a tax foreclosure the former owners have one year to pay the taxes before you own it. You basically bid on the option to buy it. Also, banks here only take properties to the courthouse that they think they will have a problem selling for some reason.

sandm · Outlaw Joined: 12 Jan 2008 Posts: 141

if you can pick that up for anything around 8-900k and it's in eagle, you should make a tidy profit. boise or meridian, look out.
keep in mind that right now, there's a greater than 12month supply in ada county in the over400k price range..