A bank owns a house that just came out of foreclosure in my area, why did it go from 43k to 12k?
Question:
*The house hasn't been advertised yet. He told me about this house because I was interested in another house that was already sold.
It was sold @ 43k because I checked the assessor's records.
Answer:
The market varies. And the bank wants it sold now. If the market is down in the area, the asking price will go down too.
A lot has happened in the last three years, and there is a credit crisis right now. That means that people can't get loans as easily as three years ago. So fewer buyers qualify, and sellers compete (lower their prices) to get buyers.
Of course the occupants may have trashed the house. You'd have to check that out. But most of a home's value is in the land, not the house. Hauling away the debris may be an extra expense, as will building something else on the lot, if it comes to that.
could be that the place is trashed inside or has a major structural problem like in the foundation,
the recodes may not have been updated yet to the new third party that bought the note most likely with pennies on the dollar value
I'm afraid to envision what a $12K house looks like. Check to make sure there isn't a giant pool of toxic waste under it.
hmmm,termites,roof and foundation problems,,on an on..
If it is a forclosure property and actually owned by the bank because it failed to sell at auction (referred to as REO or Real Estate Owned in forclosure lingo) it is very possible that the bank is owed somewhere in the ballpark of 12k and that's what they're trying to sell it for.
Once a property is REO it's considered by the bank to be a non-performing asset and it is typically in the banks best interest to sell it to recoup they're losses. The longer they hold the property the more they loose due to taxes and other carying costs such as insurance.
It could have a ton of problems, so it's always best to have a property inspected by a qualified inspector. Many states have no laws regarding home inspection qualifications so ask the realtor if they can suggest an inspector. You could also call your local real estate brokers office and ask for a referal. They're typically more than happy to give them.
Also, have a title search done before making an offer, or make the offer contingent on a clean title. A mortgage forclosure typically clears any junior liens but there are certain types of liens that are not cleared by the forclusre (such as county and federal tax liens) and you would be responsible for paying any liens remaining on the property.
First off it's so low because banks, mortgage companies, credit unions, etc are in the business of lending money not holding or selling property. Thus a bank is always a "motivated" seller. It also depends on how much the person who was foreclosed on still owed on the mortgage when the bank repoed it, 12k may be the amount owed and thus that's their asking price. Second, there are probably some structural or physical defects to the house, especially now that it's been sitting unoccupied for a while. Also, it may be in a bad neighborhood, or not have any amenities(which is a real estate terms for features people like..good schools, close to shopping, etc).Third, the realtor knew because he has access to the MLS(Multiple Listing Service) in your area. Properties for the most part are always listed there first, before you hear about them other places, so that realtors can network with each other. As far as who actually owns the house, that's a good question, there may be some sort of "cloud" on the title. This is the main reason a buyer should have a title search (and a home inspection) done before purchasing a house to make sure there isn't one.
I purchased a foreclosed house valued at 153K for 98K, and found very little wrong with it, nothing structural. Could be what was owed, could have been purchased as a tax write off.
Could be a gift, an opportunity to make some money. Where can I find a 12K home?
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