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Old 01-15-2007, 05:56 PM
Location: Colorado Springs, CO
103 posts, read 430,397 times
Reputation: 27


We are wondering if it is possible to buy a foreclosure and save some money when we purchase a home over there. Are there any property auctions? I know here you can register for the auctions and attend...higest bidder wins.. etc. Are the foreclosures listed with real estate brokers?? Are they discounted at all?? (How much??) We are willing to do some renovations if need be(cosmetic, not structural)

Thanks for any help!!
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Old 01-15-2007, 09:30 PM
20,310 posts, read 37,810,444 times
Reputation: 18087
Default Foreclosures

Here's the opinion of a friend who is a realtor and an investor... s/Mike from back east

As far as foreclosures are concerned, a lot of banks/mortgage companies list them with agents to sell. I have listed some that were foreclosed on. The banks/mortgage companies want to get a fair price because they have their expenses also.

Now as far as foreclosure sales, my ex brother-in-law and I bought properties at the weekly sales, fixed them up and flipped them. The thing you have to know is how much the property you are interested in is worth. A bank or mortgage company can only ask for what they are owed or are out dollar-wise on a property. Sometimes the bank will seek a deficiency against the foreclosed homeowner to obtain additional money for expenses above the winning bid at the sale. The investor/buyer needs to decide what the property is worth minus their expenses of buying it and whether they can make a satisfactory profit.

The problem with a lot of the foreclosed properties that go to sale weekly are that they do not have much equity built up, if any, and it's not worth purchasing. The homeowner has what is called a redemption period where if they pay their debt, they get the property back and the investor/buyer gets his money back if it's redeemed or cured by the foreclosed owner.

When you purchase properties at these sales, you have to have certified funds for the total amount of the purchase price to the Trustee within like two or three hours of the sale. There is no time to get a mortgage.

If anyone wants to call the public trustee's office here, I believe they can be put on a mailing list for free or nominal charge. I do not remember what it cost, if anything, when we did it. It's been several years.

I hope this answers your questions or gives you some understanding of how foreclosures are handled. I do not personally do them anymore for the fact that my rentals keep me busy along with being a realtor. I had 2 homes built and have had them on the market longer than planned because supply is so high and demand is low. It is truly a buyers' market here and I think you'd be wiser to have a realtor to seek out a great deal versus going the foreclosed route at the trustee sale and possilby get really burned.

You do not have the opportunity of having inspections or viewing properties prior to sale and if there are major material defects, that can really hurt the pocketbook and you can't terminate a contract or give it back; it's yours flaws and all.
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Old 01-15-2007, 09:47 PM
Location: Colorado Springs, CO
103 posts, read 430,397 times
Reputation: 27
Thank you again Mike! Way above and beyond...asking for advice on our behalf!! I very much appreciate that! I just hope we can get a decent deal so our dream of being mortgage free can come true!! Even if thats not possible, we will figure something out.....Thanks!
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Old 01-15-2007, 09:50 PM
Location: Larkspur, Colorado
226 posts, read 1,247,498 times
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Mike's friend answered most of your questions.

You generally have two options when buying foreclosed properties. First you can buy them at auction when the property is first foreclosed. This presents several problems for most buyers:
1. You must have certified funds at the auction (you can not take a traditional home loan to purchase the property).
2. You are not guaranteed clear title (you may end you purchasing a property with existing liens).
3. The prior owner has a right of redemption (if they come up with the cash to pay off the loan and fees they can get the property back and kick you out).

If no one outbids the mortgage holder at the auction the bank owns the property and they will generally list the property for sale with a Realtor. At this point in the process you can purchase the property through traditional means, with traditional home financing, with clear title and the redemption period will have expired.

When a foreclosed property is listed for sale with a realtor the bank will not negotiate on price unless the property has been sitting on the market for a while. Additionally they require 1 week to respond to an offer (if they respond at all), this can be very frustrating if you are looking for a house you plan to occupy.

Most foreclosed properties are over encumbered and have little or no remaining equity. You can occasionally get a good deal with a foreclosed property, but they are few and far between and the good deals typically sell fast.

I would not just look at foreclosed properties, you can find many good deals in resales that need a little sweat equity. Your best option is to work with a good realtor who has the patience to show you 40 homes while you look for a diamond in the rough and will notify you as soon as a new property comes on the market.
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Old 01-18-2007, 08:02 PM
10,871 posts, read 41,174,133 times
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All excellent advice above, but there is one little niche out there that I've been successful with ...

They're the properties that a bank is holding in it's repo file that are approaching the legal time limit that they can hold the asset/non-performing loan.

These will be "distress" situation properties due to insufficient equity to the loan balance, and/or condition issues. There are, as you may imagine, realtors who keep a close relationship with bank's VP's to know about these properties.

It's also the time that loan PMI insurance may kick in to cover some of the bank's (potential) losses. So, the bank may be able to get the non-performing loan out of it's file at much less than the FMV of the property or the loan which they were trying ... in (allegedly) good faith ... to get paid off by resale of the property.

Timing on these deals is everything. There will be active real estate investors/bankers/realtors/brokers who have established local relationships that will be in there with you, seeking these deals. But, you may hook up with a bank at the right time and place to be able to buy a place that's worth it to you. There won't be a redemption by the former owner, it's way past that time.

Here's what you do ... make them a low offer on the property. Since they must sell the property to get it out of their file, they may accept much less than the loan balance or what they think FMV is at the time.

Best of luck with your new home adventure.
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Old 01-18-2007, 11:56 PM
Location: Colorado Springs, CO
103 posts, read 430,397 times
Reputation: 27
Thank you very much for that info!! Are there any specific banks?? Is there some sort of list we would be able to look on? We are very very very much hoping to make our dream a reality.....no more mortgage....so any help is much appreciated....or any insight where we can look!

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Old 01-20-2007, 01:18 AM
Location: Staring at Mt. Meeker
220 posts, read 701,239 times
Reputation: 248
Default Pointers on buying foreclosures

This is slightly off-topic, but there are clearly some real estate pros chattingon this this thread. How does one find the foreclosures in a given area? Do agents have the ability to with me on this? I am looking for a literal steal for a family member and while not one to take advantage of people, see this as the quickest route since the banks want to unload quickly.

Any help would be appreciated. IM me if possible.
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Old 01-20-2007, 08:55 AM
Status: "October is the eighth month" (set 22 days ago)
Location: Just south of Denver since 1989
10,679 posts, read 28,504,890 times
Reputation: 6842
Banks do not give a hoot one way or the other...finding a "steal" requires cash, patience, lots of offers, and time.

The last time I did a short sale (lender takes less than what they are owed) it took 6 weeks to get the contract approved...and we were only short $1000 - then at closing I find my fee has been reduced from 3% to 2.5% and they still wanted $350 from me at closing or no deal.

You will literally have make 100+ offers to find one that sticks.
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Old 01-20-2007, 12:38 PM
Location: Colorado Springs, CO
103 posts, read 430,397 times
Reputation: 27
Thank you for that ......I am sure that it would take a lot of patience and time....we will have cash... and can make the time if need be! I would of course love to find a house on the re-sale market that was a great deal....not sure how likely that will be. I think the key will be finding the right agent!
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Old 01-20-2007, 05:03 PM
10,871 posts, read 41,174,133 times
Reputation: 14014
if you're looking at going this route, you will do best to contact banks/lenders directly and ask to speak with the loan officer or VP who handles these non-performing loan files.

As a second way to do this, find a realtor in the area you're interested in buying who specializes in distress properties.

It will take time, patience, and the ability to act quickly when an opportunity arises.

We recently dealt with a property in Wyoming that had numerous loans against it that exceeded it's FMV by over 150%. Our below FMV offer was accepted by the bank, but turned down as being too short by the Feds who held a farm loan against the overall property. Oh well ... you just keep trying.

I am not a professional realtor, just an investor trying to secure a positve cash flow that will let me have a retirement income. I've always worked for myself, so don't have a pension or other benefit to claim.
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