[OP]
Member
We are looking at buying a house that is in foreclosure. Has anyone done this, or can offer advise on the process?
We are leaning towards hiring an attorney, since we have no experience in this.
Tomorrow I will go to the courthouse to check for unpaid taxes, liens and who knows what else...
Contributor
Most of the time, it's advantageous to the buyer to wait until the house completes the foreclosure process and the bank owns it. At that point the bank gets a BPO, Buyer Price Opinion. They almost always take far less than a seller would because they are simply trying to unload the house. As one banker told me, "We are in the money business, not the house business." Either way, when dealing with a bank and lawyers, the process is usually drawn out.
Member
If you're working with a realtor he can handle all the investigation. If not, you're going to need a lawyer to do the closing anyway so you can have him check everything out .I think that's the best time to buy a house, in foreclosure. You get the best prices. Sometimes you need to move quickly, as there are multiple buyers looking for deals. I have four rental houses that were all bought in foreclosure back during the financial crisis.
Contributor
Whether you hire an attorney or not, I would not buy a property without having a professional title search done. If you plan to get title insurance, they usually go together, so it may make sense to shop around and decide on a title insurance company. If you are just getting one without insurance, it might cost a couple of hundred dollars.Originally Posted by Bill Bukovec
I would advise you to be very careful about legal advice over the Internet. The law varies too much from state to state.
Contributor
That right there.The law varies too much from state to state.
A few years ago I had it in mind to do the same thing. I watched the Sheriff's sale listings for months - did drive bys of the properties I liked and did as much searching online with the county & court records as I could.
One particularly "sweet deal" came up. I forget the exact details, but, it was literally a pennies on the dollar type of deal.
I was shocked when the properties came up for sale - and - no one, not even the bank - placed a bid.
A couple months later, I saw some news story about the properties & they made some obscure references to the DEA and IRS having some type of involvement.
I have no idea what it was all about, but, whatever it was it scared off some really heavy hitters.
OTOH - I've had a few friends and some acquaintances fall into some nice deals on foreclosures & short sales.
Bank owned (in my area) are real hit and miss. Even though they don't want to be in the real estate business, they have a very ridgid set of figures they work with.
Matter of fact, there's one house now that's going on 3 years being vacant. It used to be a real nice house, but, not as nice as the bank thought it was.
It sat unsold for 9 months, then got pulled off the market for 3 months. After 3 months, it went back on the market at - - roughly 25% more than the previous initial offering!
Same thing happened & sure enough, the price went way up past the initial offering of the house the third time it went to market.
I mean come on - if the house didn't sell at $150k, and it didn't sell when it got marked down to $125k, then why would anyone do anything but laugh when it went back on the market at $180k -- AND in worse shape!
Banks.......sheesh.....
"Life is what happens to you while you're busy making other plans." - John Lennon
Contributor
Two possibilities come to mind: (1) properties involved in the illegal drug trade may be forfeited (2) depending on the drug involved, the entire property may be contaminated with toxic chemicals, and be basically unliveable.
[OP]
Member
The law firm that is conducting the sale said I would not have access to the property to perform an inspection. So, we decided not to pursue it any further. I've heard too many horror stories about people trashing the house before they leave.
Thanks for all the help.
Bill
Contributor
How is buying a house in foreclosure fundamentally different than any other house purchase? I bought a house that was owned by the bank after foreclosure and it wasn't any different than any other house purchase other than lack of disclosure statement.
Contributor
Disclosure statements are a state by state condition. Some states require full disclosure and termite inspections before a sale. Some states are buyer beware.it wasn't any different than any other house purchase other than lack of disclosure statement.
If someone told me there wasn't any inspection allowed, I would either say the price will then be one quarter of what you are asking or I might say goodbye. Too many pigs in pokes trying to be passed off.
I have been working with a friend on a house he bought. He has had trouble with contractors from a big box store doing a terrible job on the roof and vandals broke in while the bank owned it and took all the pipe and wiring they could.
Currently it is what I have heard realtors call "an alligator." It is eating up money and giving no return.
There are considerations before buying a foreclosure or REO (Real Estate Owned by a bank). A buyer needs to have a plan of what they are going to do with the property. They need to be ready to do a lot of work hauling trash to the dump and fixing up the place. This is after doing all the due diligence to make sure there are no leans filed on the property for unpaid work or taxes.
jtk
Last edited by Jim Koepke; 08-17-2016 at 9:04 PM. Reason: spelling
"A pessimist sees the difficulty in every opportunity; an optimist sees the opportunity in every difficulty."
- Sir Winston Churchill (1874-1965)
Guest
The part that scared me a bit is the right of redemption after sale - http://www.groco.com/readingroom/rea...edemption.aspx In Oregon I believe (going from memory) that that is up to a year after the foreclosure. The net effect is that a lot of places sit empty (and uncared for) for the full timeline of the right of redemption before they go to auction by which time they're in a lot worse shape than they were at foreclosure. The state and local laws can be a real landmine.
Member
I bought a house in foreclosure. The process wasn't that bad. I did not hire a lawyer - I just used my real estate agent (my mother). I'm in Texas.
Around here, the prices really aren't that great when buying a foreclosure, and I found I had no chance of them doing any repairs. I also found that their idea of what needed repairing, and the allowance they were offering, were ridiculous. For example, the house used to have window a/c units. Per HUD, they said the house needed an A/C system. They allowed $150 for a new A/C system. Yeah, right! Also, the plumbing was a total disaster, and they allowed $75 for repairs. The house needed a total re-pipe and did not have a water heater! The windows were leaking and it had a lot of wood rot. They allowed nothing for that. It had lead paint, asbestos siding and a Federal breaker box (aka, non-functioning breakers).
Overall, my experience was a good one. I knew it was a total re-do. I had a great time gutting it and rebuilding it. I ended up selling it to my dad for his retirement house.
Know what you are getting into financially is my advice. If I would not have been able to do most of the work myself, it would have been a cost prohibitive project. Even as it was, I don't think I made much money at all. But, it did bring up the value of the properly considerably and hopefully will encourage others on the street to invest some in their own properties.
Last edited by Todd Burch; 08-18-2016 at 4:16 PM. Reason: typos
Member
Sadly its a dog eat dog world out there.
Member
The biggest difference is the attitude of the previous owner. A normal seller often does extra things to make the house easier to sell.
Someone that is getting foreclosed might destroy the house out of anger. My realtor told me stories about people that would pour concrete down the drains just before losing the house. There is also the risk of them stripping the house of all fixtures and wiring. Plus there is the fact that the previous owner is likely to skip all required maintenance for a couple of years after they stopped making the payments. At a minimum, I would want to be able to peek in the windows to make a decision. And make sure that the price reduction makes up for any potential issues that come up.
Good luck with your decision.
Steve
Moderator
That right there would back me off. Good call dropping it.
Contributor
If a bank owns a house due to foreclosure how can they give a disclosure since they never lived there? About all they could disclose would be what they could see from having somebody do an inspection. That is why the bank didn't provide me a disclosure statement.
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