Buying Foreclosures--any advice??

[pipersrocks]

Originally Posted by selltheburgh

No, I'm not. This is what I do for a living.

What do you even mean by auctions?

Have you ever bought a foreclosure? Have you ever sold one?

Pre-foreclosure is when the owner is behind in their payments and the house isn't owned by the bank yet. It is on its way to being foreclosed on. Plain and simple.

Sites like trulia, zillow, yahoo, etc post pre-foreclosures on there. Prospective buyers salivate at the potential bargain. The home owner typically doesn't have it listed for sale and won't let you in.

Then once the legal work is done the house should go to sheriff sale. The bank makes the first bid for the mortgage amount plus water liens, taxes and legal fees plus realtor fees to sell it. You see it in the recorder as $3500 but really the price was $65000 because of the bank doesn't need to buy their own back debt.

I wasn't really interested in it if it were a pre-foreclosure. I think there might be some confusion about the status and I'm not so sure websites like zillow are always up to date. The real estate agent I contacted may have looked at zillow since I contacted her through there. The other website I looked at specializes in listing foreclosures (one of those that you have to pay for to get more information on the property.. I just happened to figure out the address) and has its status listed as "Real Estate Owned." I figured this meant that they already went through pre-foreclosure as the auction was listed on zillow to occur on March 4th and perhaps zillow just hasn't updated the status yet. However, when I drove by the house it looked like someone still lives there. Is this possible after the foreclosure takes place and the home becomes REO? What usually happens next in the process if the house has just recently become bank-owned? Thanks for all your help btw!

[pipersrocks]

Originally Posted by bradjl2009

One thing I've heard is have a home inspector look at the home but unfortunately usually you have the buy or sign for the home before you can do that.

I may be confused on this, but from what I've been reading online you are in fact able to get an inspection before closing on the house. I'm pretty sure you can make an offer contingent upon inspection just like any other house you would buy. Does anyone else have anything to add to this?.. because I don't think buying a house without first having an inspection is something I'd be willing to do.

[groar]

our house was a foreclosure and the process of buying it was pretty normal. this was about 5 years ago. we made an offer, went back and forth a bit, then our offer was accepted, we had the house inspected, got a title search, etc. we also got a deal on the mortgage because we financed with the bank that owned the house.

this was not a pre-foreclosure, it was a house that was in the possession of the bank. i think they played a bit more hardball than some private owners might, but we ultimately got a good deal on the place (partly because we played hardball back without meaning to when we were waiting for a quote on some work before accepting the bank's offer). the pre-foreclosure thing is a whole other ballgame - i'd stay away from that. it's pretty messed up that the places are posted on zillow and similar sites before the owners have really lost them. i think if a house is labeled "foreclosure" on zillow, it is pre-foreclosure. if it's for sale by a bank that foreclosed on it, it's just listed as a normal house for sale.

[Hopes]

I saw one online once that basically said "Owner occupied. If you buy this you will be responsible for taking possession of the house." That meaning you need to evict the owner after you buy it. You don't get to inspect those houses. There's an increased chance of the owner being upset and trashing the place. It was an auction with X number of days to bid. A real estate agent said that it's a PITA because you never know what the bank's reserve is for it. She had assisted bids on other pre-foreclosures and nobody ever reached the price the bank wanted. That's what I mean about the difference between an auction and a pre-foreclosure that the owner wants to sell.

As for what happens prior to and immediately after the bank forecloses, there was a foreclosure on our street. The owner was awesome, not someone who wanted to trash the place. He actually begged the bank to take his home for a very long time before it did. You could get insight via talking to neighbors. We would have given him a great reference as a homeowner. He cared about that house and maintained it well.

Anyways, he mostly moved out of the house long before the bank foreclosed, but a lot of his possessions were still there. After the legal repossession was complete through the courts, the bank came for months looking in the windows, but only officially "took possession" when they heard he was no longer there. Apparently there is a process after the bank forecloses before the bank evicts the owner. It's not like the day they foreclose they can show up and toss the possessions out.

The weirdest thing is a bunch of Russians showed up in the middle of the night with a truck and emptied the place. The bank contracted this company of Russians who didn't speak English to empty the house. Since there's no electricity, they walk around with flash lights, looking like burglars except they make a lot more noise.

Once the house was emptied, a real estate agent hung a sign on Friday, and brought bunch of people to see it on Sunday. Someone made an offer that day. That's how fast foreclosures sell. Even though it's in great condition, it was sold for significantly less than the purchase price.