Has anyone had any experience with purchasing a home thru foreclosure? any thoughts?

quote:

Originally posted by iz:
thanks guys!
i actually put an offer on a hosue on sunday, and i believe it is going thur just fine and dandy today (fingers crossed)

Sending best wishes in your direction!

quote:

Originally posted by D in St Pete:
He kept in touch with the company, said he was willing to work with them (but never really did),.

I think things are different now... but in 1994... Countrywide had what they called the "Work Out" Department... where they would "work" with you. However, when I called them, they said, "We can't work with you until you are 3 months behind in your payments". ???? ??? I called them because I didn't WANT to be behind, but they refused to talk to me at all until I was behind 3 months, so I said, "OK... I can arrange that".

I hope it goes well for you, iz...this is a really good market to be buying in!

We looked at 3 short-sale houses this weekend...all three had been built less than two years ago, purchased new, never lived in...the buyer expected to be able to flip them.

Records show they were purchased from the developer in the $350-$450 range...and are in short sale at $250-$300. However, the realtor handling them right now says no one is willing to pay that, and she expects them to go to auction soon.

Strange foreclosure story...the boyfriend's brother had his condo foreclosed. Why? He lost his job and figured the best way to save money was to not pay his mortgage. He kept in touch with the company, said he was willing to work with them (but never really did), and would you believe...he was in that place, for NO MONEY, for just over a year. He kept it in good shape (in his words, "It's my CONDO, of course it's going to look nice, I'm not going to live in a hovel."), even painted several rooms. So weird. I'm thankful, often, that I ended up with one of the "good" brothers.

thanks guys!
i actually put an offer on a hosue on sunday, and i believe it is going thur just fine and dandy today (fingers crossed) but i did look at the outside of a foreclosed home near our current place, and it looked awful on the outside. i could just feel it had a feeling of being neglected. altho it would have been a deal and worth looking at, i had to also consider--do i want to spend the first few months on a house fixing it up? there is a sense of comfort and safety to being able to just move in (which is a tough enough transition, especially for dd)
so i saw this house , i fell in love instantly: it felt well taken care of. meticulous, in fact. there is some land that is just beautiful. it is across the street from major grocery stores, and right on the major freeway that will give me access to everything quickly.i am closer to my best friend (just a 8 minute drive) i am really excited, and i wish you all could come over when i am settled (not til the summer)!!

I’ve been on the seller’s side of a short sale. We had a property go into foreclosure about 15 years ago. (Predatory loans and dumb people to take them out are nothing new. Been one of those dumb people. )

I don’t think that the buyer of our condo ever knew that she was buying a property that was in foreclosure. She paid market price and didn’t get any kind great deal. The REASON we were in foreclosure was that real estate prices had REALLY gone down. We had paid $117,500 during a real estate bubble and the bubble burst and the properties were going for $63,000. She paid about that… but that was the market price at the time.

I can tell you from first hand experience that foreclosure properties often have YEARS of deferred maintenance. If a person is not able to pay their mortgage payment… they are often not able to pay to repair leaky roofs, dry rot, termite damage; or upgrade plumbing, electrical or furnace systems.

Not paying the mortgage was our VERY last resort, and it KILLED me to do so. I think that MOST people who go into foreclosure are like us. This was not something we did on a whim. We didn’t wake up one morning and decide to stop paying the mortgage. We struggled for about 3 years to pay that mortgage… and we were successful for MOST of that time… and then we just couldn’t do it anymore. We had several years where money was VERY tight… but we still made the mortgage payments… but were doing virtually NO home repairs. I think that this is a very common experience.

The property that we owned went into foreclosure was a rental property and was actually in really good shape… but we didn’t do any home repairs on our own home that we were living in for about 7 years… and then when we had to fix our own house… it was about $30,000 worth of roofing, electrical, plumbing, dry rot, and termites. However, many people have the homes that they are living in go into foreclosure… and might have a few years of making that mortgage payment… but are doing very little basic maintainence to the property.

My mom bought a house that was in foreclosure and it worked out fine… however, my stepfather is a building inspector. That is what he does for a living. He has a lot of construction experience. They also bought a house that was quite new. I don’t think that they got a great deal though. The house needed many several thousand dollars worth of repairs. They bought a fixer upper… and paid fixer upper prices… and the fact that it was in foreclosure did not affect the price.

If a house is “worth” $200K but needs $50K in repairs… then you are going to pay $150K… regardless of foreclosure or no. Many foreclosures appear to be a good deal, because all of the other houses in the neighborhood are going for $200K… but the foreclosure home may need $50K of work… so that house will be going for $150K.

Also, MANY foreclosures happen when a real estate bubble bursts. Like in our case… we paid $117,500 for that condo… and then real estate (and rental prices) took a huge dive… and the condo was worth $64,000. ALL of the condos in complex were going for $64,000. It is just that we owed $100,000 to the bank… and when it sold… they got $64,000. But the buyer paid market value at the time. The bank wasn’t going to sell the condo for like $30,000... When all of the other houses in the complex were going for $64,000.

Me personally, I would not go out intentionally looking for a foreclosure property. I’d just look at properties in your price range and with other specifications that meet your needs. When we have looked at homes… we have seen homes that are in foreclosure… and some that are not. I don’t think that the foreclosed homes have been any great deal… because the ones I have seen, need a great deal of work. Or if a real estate bubble has burst and home prices are lower and it is buyers market… that is true for ALL the homes on the market… foreclosed or no.

EDIT PS: The foreclosed house my mom and stepdad bought... the people were REALLY angry when they were forced to move out of their home and did a lot of punching of walls and doors and several thousand dollars worth of property damage before moving out. However, the house was fairly new and the plumbing, electrical, etc. were pretty good but it looked really bad and still needed a lot of work. But they paid a fair market price for a house that looked pretty bad and needed a lot of work.

This message has been edited. Last edited by: GoingSkiing,

BTW, in our area, some new home builders have auctioning off their new homes.

Agree with Peg! We're shopping with the boyfriend's brother...and have looked at a lot of short sell and going-to-auction homes. The stuff that's a dealbreaker, we see right away...and we're not pros, just people who have done a lot of home remodel.

And you can never look at too many!

thanks peg!

Iz,
At least in CO, even if you were under contract, you would have a 'get out of jail free' card that would allow you to get out of the contract if there was something discovered on an inspection that you decided was a deal breaker. Here, it could be as minor as "oh, I don't like that color carpet"...almost anything is adequate and any house has something. You don't have to figure it all out in a showing. Go take a look and then you can decide if it's worth getting under contract and getting a pro in there. Likely it doesn't even have the water and electricity on (if they winterized it...if they didn't and no heat, that would be big red flag) so you aren't going to get a total picture at this point anyway. Also, if you have a friend who is sort of handy, that might be as good as anything for an initial showing.

Exciting! Great time to be getting into the market if you can swing it and even better if you can do it at a super bargain price.

Peg

there is a house on the real estate market that is a foreclosure. it is priced at half of what houses are going for in that neighborhood. i have not seen it but have asked for a showing. i am just wondering how bad a shape it is in. thanks guys. i wish i knew an inspector who could come to the showing with me.

The longer that the house has been in the bank's possession, the more likely they are to accept lower offers.

My experience though is that you get the house "as is". Anything you find upon inspection is your responsibility to fix and the bank has probably already taken that into account when pricing the property.

We almost bought a house out of foreclosure before we decided to build. In the end, there was too much work that needed to be done (including having to re-do the entire plumbing system).

I think that if you do your homework, there are definitely some great deals to be had.

This is what I have learned. You can go online to the county records of the town you are interested in and look up foreclosures.

Here in Florida, the banks want to recover as much as they can, so they do what is called a "short sell". The bank puts the home on the market through a realtor to try to sell it for at least what is owed on the mortgage.

If it doesn't sell within a certain time frame, they conduct an auction that you can attend and bid on a home.

It is hard to tell which house is in foreclosure at first, so if you see homes that are vacant or on the market, go online to the county records and if you see a term "lis pendens" that generally means that the house is in pre foreclosure. You can generally look up a home by the address, unless you know the name of the owners.

Short sells don't generally give you much bargaining room. They are pretty stiff on their price. The realtor wants to make some money, so they don't bargain.