After almost three and a half years of renting an apartment I’ve decided it’s time for me to buy a house of my own. Since I can’t afford any of the new homes around here (even the cheaper homes usually run between $150,000 and $200,000) I’ve decided to look for a foreclosure.
I’ve gone through quite a few foreclosure Web sites and found great deals on many homes in my area. There’s just one problem – the sites don’t provide any information on the houses. Some have links to real estate offices (which I’ve contacted), and others require you to pay for the information. I don’t know where to go at this point.
I know there have to be a few Dopers out there who have bought foreclosures, or who are at least familiar with the process. What do I need to do now? Should I subscribe to one of these Web sites, or would it be better to pick a local real estate agent? I have absolutely no idea where to start. Can anyone help me out with this?
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I’m also very interested in getting some real-world information on this subject that isn’t somehow biased … come on, aren’t there any realtors, agents, or mortgage brokers who can point Ladybug and others like myself in the right direction? I’m in Chicago, she’s in West Palm Beach (if that helps at all)
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We have residential agents in our office that deal (as the exclusive agent) with banks and various mortgage lenders with REO (Real Estate owned) foreclosures. Foreclosures are a large PITA for most lenders, and while an agent can make (some) money selling these, they are time and effort intensive.
With respect to foreclosures, they are not necessarily the best deal for a first time buyer, as they are primarily houses at the lower (far lower in many cases) end of the price and quality spectrum and often need a fair amount of work to be habitable. If it was a decent house priced to market, the owner’s would have probably been able to sell it before defaulting in many cases or an investor would have purchased it for a rental.
This also relates to financing as it’s sometimes difficult to get competitive financing deals (even from the lenders that own them) on these properties due to condition. You generally need to come with cash or a loan committment in hand to get the best deals on these properties.
We bought a foreclosed property. The rules may be set up differently where you are; I am in Hawai’i. We found the property listed in the local paper and went and looked at it when the showing time was listed. We had to do our own inspection, basically, literaly crawling under the house and up on the roof. It needed a lot of work, but it only required a down payment of 10% of the price you bid. There was an info sheet available on the financial and legal stuff involved. On the day of the auction, we showed up at the courthouse with the required cashier’s check for the down payment (10% of what we had decided would be our top bid, taking into account our finances and the work we knew we’d have to have done immediately, and what could wait). The risk is that if you win the bid, you hand over your check then and there, but if for any reason you can’t get the financing for the whole loan, you lose the entire down payment.
We went to the court again for the final judgment, which allows anyone to come in and challenge your bid as long as they come up with at least 5% more (I think). But nobody else did, so it was ours. The bank that held the mortgage did all the legal stuff and we signed all the papers and gave them every cent we had. Then we went roof shopping.
I’m sure the rules are variable depending on where you are. We knew very little going in and just blundered our way through. I can’t say I’d recommend that as a method, but it worked out for us.
I don’t know all the details, but my parents bought their house (in Florida) from a bank at auction, due to foreclosure. I think they heard about the house from a friend of theirs who lived in the same development. I think there was a sign on the door of the house that had the bank’s name on it, so they phoned the bank directly to get the details about the auction and dates. It’s a great house, and they got a good deal. I think the former owner was some kind of drug-addicted dentist who had a lot of porno magazines stashed in the kitchen. But it’s a very nice house on a golf course.