Buying a foreclosure house?
Question:
Answer:
i think sometimes its a bad thing to get a foreclosure, for one i think if the home orginally had liens (home equity loans, ect) those amounts are also added to that starting price.
In California, the best time to pick up a property is in the pre-foreclosure stage. Find a Real Estate agent that is good at finding undervalued properties and work with them. The other thing you can do is get familiar with your market area where you can tell how much homes are worth and target sellers directly through a marketing campaign.
Also, keep in mind that just because a home is a foreclosure, doesn't mean it's a great deal.
Regards
I can specifically respond regarding HUD foreclosures. You will need a real estate agent to submit a bid on your behalf so start looking for a real estate agent in your area that is approved to submit bids on HUD homes. Your agent will advise you to get pre-approved for a loan in order to see how much of a loan you will be able to get. Your agent will be able to get you inside of the homes that are available in order to see the inside, but you have to hurry because these houses go up for bid quickly. Ask coworkers and friends for names of real estate agents--someone they are friends with or go to church with before you start going through the telephone book. For a list of homes in your area go to the link below:
Well my experience is in Florida, but in a word, leave it to the professionals. You absolutely could get lucky, but you also could lose your life savings. The below are my opinions on the matter.
First of all, you absolutely must have a command of the local law. You need to find out if you are in a "deed theory state" or a "lien theory state". This is vital. The implications to your risks is drastic depending on the theory inherent in your state's laws. Check with an attorney to make sure.
Then you have the problem with foreclosure sales in that there are two kinds, real and "fake".
The real ones are generally still technically owned by the person losing them. These people often don't want to sell and are often too traumatized by their situation to jump off the sinking boat,..and if they aren't, WATCH OUT, you might go down with the boat too. You usually must contact people in a really really bad attitude and could be at risk of physical harm or death. It doesn't matter that you are saving their bacon, many see only you profiting by their misery.
Then there are the remorseful sellers. Those who you save from foreclosure who, after you saved their bacon, suddenly decide that you informed them that you were just loaning them money, and the deed was just collateral for the loan. Sometimes no amount of CYA paperwork can stop the, "but he told me otherwise" defense. It doesn't matter that, but for your purchase, they would have lost everything, you now have a lawsuit on your hands, and to some judges, you look like a carrion eating vulture that needs a lesson.
Even if you pass these hurdles, there could be hidden liens (not all liens are recorded where they are easily found), hidden physical damages, hidden title defects, and work and/or repairs done without proper licenses or with open licenses. Any one of these land mines could sink your ship; some could land you on bankruptcy row, such as an environmental lien. It is possible for a $3,500,000.00 environmental lien to be on a $50,000.00 house that attaches to every person who takes ownership of the home. The worst part is that usually, you have to buy these properties without any chance to properly inspect them. Once I looked at one house (from the road) and later found out I bought another.
Alternatively there are the "Fake" foreclosures. These are the ones that are in the hands of the banks' real estate brokers, or on many "Foreclosure" lists. THESE ARE USUALLY MUCH SAFER. But Safety is also usually inverse to profitability.
Usually, the bank has already completed a full foreclosure, added a slew of fees to the purchase price, and in my experience, banks usually want at or near full retail value anyway once they get that far, especially when they can advertise it as a "Foreclosure Special". Also, to sell the property, the Bank has probably renovated the property with all the cheapest "Builder's Quality" kitchen, cabinets, toilets, A/C etc., as was absolutely necessary to bring it to sellable condition.
However, these are generally the safer alternative, and you can still get a deal, but often you are better off just getting a nice house from the broker, as the foreclosure houses are usually sold "as-is", which usually means that you have a chance to inspect these house, but if your inspector misses anything, it is your problem. And ALWAYS get title insurance (that goes for any purchase, not just foreclosures). The cost/benefit ratio is immeasurable.
All in all it is a profitable game, but definitely not for the slight of heart or who cannot afford a major loss.
The above is personal opinion and commentary and should not be taken as legal advice. Please make sure to contact an attorney or other legal professional, as well as real estate professionals, and an accountant, before entering upon such a risky venture.
More Related Questions & Answers...