buying a foreclosed home

In My Humble Opinion
1

I am looking to sell my home and buy in another local city. Houses in my neighborhood sell quickly and I don’t believe I’d have a problem selling mine. I’ve done lots of updates on it and it’s a great house compared to most in this area.

The reason I want to move is, my neighborhood isn’t very child friendly, the schools are not to great and I have a 3 year old boy. I’d like to be settled in a new home by the time he starts kindergarten in September 2015.

I’ve decided on the city and the specific area of this city I want to move to. This specific area is a popular and I’ve noticed there aren’t very many houses for sale there. It seems like once people buy in this area, they stay.

The few houses for sale that I’ve toured are a bit beyond my price range, too large for a family of 3 or have been neglected and need way too much work.

This is the busy time of year for buying/ selling and I’m getting worried there’s not much to pick from in the location I want and I won’t find anything or I’ll end up settling for something so-so.

I was browsing Trulia and Zillow and there are many foreclosed homes in this area. They don’t show any pictures, but when I go on Google street view, some of these homes look like something I might like.

Has anyone every bought a foreclosed home? Was it worth it? Is it a very stressful process? I know it can be risky and each area is different, but is it a good idea to look into foreclosed property?

For me, location is important and I don’t have a problem if the house isn’t 100% up to par. I am willing to put some money into remodeling, if the house has potential and is within walking distance of the downtown area.

Also, depending on the sale price and the sale of the house I live in now, I may be able to pay cash. Does that make a big difference with a foreclosure?

Or should I run screaming from any foreclosed homes and patiently wait and pray for a decent home through the regular sale process?

2

Both of my last two homes were foreclosures. I found the process fairly easy since we dealt with a bank instead of the home owner.

Get the inspection done though because the bank can’t tell you things about the house that an owner might be obligated to tell you.

I actually got a pretty good deal both times. Good luck.

3

If you are paying cash for a foreclosure you can usually wangle your best deal as it’s a quick close for the bank. The key is to get a very through inspection done prior to your money going hard as banks are much less likely to be willing fix any broken or maintenance oriented stuff and the deals are more “as is”.

Generally banks choose a real estate firm in the area to handle their foreclosures. The listings should be available through the normal regional multiple list.

As a side note agents specializing in foreclosures are often not going to spend as much time handholding as regular sales agents as the commissions are discounted and fairly small and they have to turn volume to make any money. If you are looking at foreclosures and are unprepared it’s possible you will be dealt with brusquely. You need to have your financial ducks in a row and what you can spend nailed down before getting serious.

4

Great to hear! So, avoid dealing with home owners if possible. Got it. I have an inspector already lined up that my brother used recently. This guy is OCD thorough when inspecting homes. Any mistakes you made during the first foreclosure that helped make the second one any easier? Glad to hear you got a couple good deals.

5

Just a cautionary tale.

http://www.king5.com/news/get-jesse/Buyer-finds-Fannie-Mae-owned-foreclosure-has-dirty-little-secret-207480761.html

Granted, the buyer should have been smarter, but honestly, there are some things an inspector wouldn’t have caught; such as siding being put on top of the bad siding, among other things.

6

Heres a link to foreclosed Homes HUD, the VA, and other agencies are selling. You can search by state and city.

7

In the foreclosures around my neighborhood, cash deals are the only kind the banks will accept. You can make an offer with financing arranged in advance, but the banks won’t accept a financing contingency.

And the banks won’t fix anything. All transactions are “as is.” The only concession banks will make is to allow inspections, but they won’t allow any contingencies in the offer. If you want to have an inspection, you can do it on your own time and money, but the banks won’t wait and someone else may get the jump on you. There may be many bids at the same time and the banks will pick which on their time (which means settle down for a long wait with no communication), not yours.

In exchange for this unfriendly attitude, properties are priced very low and will sell right away. The time on the market is measured in days, unlike most properties, where it is typically measured in years. Banks are not shy of reducing prices frequently and rapidly. If you know what you are doing (like you’re a contractor), you can get a bargain. If you don’t know what you are doing, it’s a real gamble and suing after purchase is a real waste of time, as the banks have all the lawyers.

8

I saw one of the house flipper shows a few months ago. They bought a house at an auction. The foreclosed homeowner had stripped out all the copper (wire and pipe), the light fixtures, faucets, and appliances. Quite a bill repairing the damage.

A good inspection can save you a lot of grief.

Also make sure it wasn’t a drug house. I’ve read meth operations leave behind very toxic chemicals.

9

I can’t think of any. It helped that both of the places we bought had been empty for quite some time. The banks were eager to sell.

10

I purchased a HUD home and the process went smoothly. I think I saved about 15% over market.

11

You are correct. I was conflating residential foreclosures and short sales together. There is some flex on short sales , foreclosures much less so.

12

HUD makes the inspections they have done available. Since I know what my capabilities are I could use those as a guideline in deciding which house to personally inspect.

13

Thanks everyone. I have a long weekend ahead which I’ll spend a chunk of educated myself on this process. There are some great looking foreclosed homes on Trulia in the area I like, so this might be the way to go.

14

Back when I was looking at foreclosed condos, I had a Realtor who was certified in distressed properties. He was immensely useful, as he was able to spot problems I wouldn’t have, and helped reduce the number of possible properties and narrow down the list of what to even bother looking at further than the first visit. I only needed to get two places inspected instead of all of them.

Looking at foreclosed properties is also easier and faster because it’s usually just you and your Realtor. There’s no seller’s Realtor to deal with and no one to wait on appointments to see the home, my Realtor just called the listing agent and got the code for the key box, and we were able to look at 5 or 6 places in the afternoons before I went to work.

15

Before I comment, please note that a Realtor[sup]TM[/sup] and an agent are not synonyms. An agent is either a salesman or a broker licensed by the state. A Realtor is an agent who belongs to the National Association of Realtors. “Realtor” is a trademarked term. Also note that the word “Realtor” is two syllables, not three.

That said, most agents belong to NAR (the exceptions are inactive agents or ones who specialize in niche sales like new condos or timeshares). Membership gives them many advantages, one of which is access to the MLS (Multiple Listing Service).

Although things may be different in your state, a listing agent is the seller’s agent, and probably the seller’s Realtor. I’m pretty sure the seller, even if a bank, has a listing contract with an agent even if you didn’t see or talk to one. Foreclosure agents don’t take the care with properties that other sales require, and they rarely show the properties themselves. (Why should they? The property will sell soon anyway; it doesn’t need a slick brochure or a fancy sales talk – the price does the talking.)

The reason things went efficiently in your search was probably due to properties being vacant and you having an agent who knew how to take advantage of the system.