Anyone investing in foreclosures? (real estate, appliances, credit)

[SALUKI_LOVER]

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[LilWorld]

I am interested in knowing about this as well. I have read a lot of reports which essentially boil down to 'stay away from foreclosures' - but I am wondering if there is anyone out these who has done it and has been successful. Even not so successful stories would be helpful.

[saturnfan]

Clark Howard advises against this for all but experts.

In a good market, foreclosure properties are not usually in good shape.

[bull_city_original]

Not until Winter 2008 or possibly later

[dansdrive]

No to risky at this time. Possibly whenever the bottom hits in the housing market.

[os08]

We bought a foreclosure (REO - real estate owned) in 27713 as our primary residence. We've seen a few REO's. There are three stages at which you can purchase a "foreclosure" - 1) preforeclosure 2) auction 3) REO. The first two may get you better deals but unless you're well seasoned buyer probably should stay away. REO's are properties that are back in the hands of the investor(s) and now put back on the market. Usually there are really no bargains to be had at this stage because the investors want their money unless they have a bunch on their books they're desperate to liquidate. However, it's less risky, because you can check out the property, title cleared, liens paid, etc. But remember, the property will offered in "as-is" condition meaning owner/investor will not pay for repairs or offer any disclosures such as lead paint, asbestos. Therefore, you must get a very good inspector and sometimes, an engineer.

We've seen a few and many needed quite a bit of work and many had major appliances missing, ex fridge, stoves, dishwashers. The one we finally bought was on the market for 6 months but needed only a few minor repairs. Our agent told us the former owners had to relocate and tried to sell the property. So nothing was purposely destroyed or damaged. Although we bought an "as-is" property, we were able to negotiate with the investors to pay for pest control (minor termite problem), home warranty for a year, and steam clean the carpets.

This was our first time buying a foreclosure so I did alot of reading and research as we went along. Check out hudhomes.gov, hudhouses.com - just a few examples. Hudhomes offer property condition reports including pictures. It helps in eliminating the true duds but again, make sure you still do the inspection. Hud homes also offer credit for renovations if you qualify. Many require virtual bids that only licensed agents can put in on your behalf. And the response may take weeks. So patience is needed. Otherwise the process is almost similar to buying a non-REO foreclosed house.

It wasn't as "scary" an experience as I thought it would be, but you do have to make sure you know what you're doing since it is considered an "as-is" property.