Buying Foreclosed Homes.....

[Tyler]

So, I'm finding a bunch of homes in Tallahassee that are really cheap because they've been foreclosed on. I was just wondering if among this forum we have any real estate gurus? Are there any major hangups on buying such homes? If the home itself is in good shape, are there any financial backlashings to be prepaired for?

[McLovin600]

disclaimer I am not an expert at all but am in the process of buying one right now. Price negotiation seems minimal to none. The property will be as-is (I have seen some major shitholes, I can't believe people live like that, those ppl deserve not to have a house). Also for some reason I can't add my closing costs (seem higher than normal) to the loan.

[fcbayern]

Well I think most of you know I am a Realtor ®. Buying forclosures is the only way to buy a house in todays market.
Do's and Don'ts:

DO!
1-Get qualified for a loan with a major bank BEFORE starting to look for a house (this will tell you what houses you qualify for)
2-Work with a reputable Realtor (hopefully one who works mostly with Buyers) PM me I have a lot of Realtor friends around the US I can reccomend
3-Your research on the Neighborhood and the number of other homes that might be in foreclosure.

Dont!
1- Listen to the HYPE from the media, family, or your friends.. Find someone who buys and sells homes EVERYday and ask them (each market is different)

2- think your going to buy a home for pennies. Its true homes are cheaper now. Banks do not want to hold on to foreclosed homes for a long time. But they are not stupid. They know what homes are worth. They will sell at a discount, usually 10-20% below market value to sell the home fast. But they will not sell homes for 50-60% or more below the value, like maany people would have you believe.

3- Dont fall inlove with any home. With this many homes on the market there are plenty of opportunities. By the same token there is also a lot of competition to purchase those homes. It is not unheard of (in todays market) to put in 5,6,8 10 offers before you get one accepted by the bank.

4- be affraid to offer MORE than the asking price. Like I said before there is a lot of competition. If you find a home you really like. Offering even 2K-3K dollars more than the asking price might ensure you get your offer accepted. And you monthly payment might go up $20


If you guys have any more questions feel free to PM me here and I will try to help you out, or put you in contact with someone who can

[delSol_si]

Like I said in chat, a lot of people who are having their homes foreclosed on trash it before they leave...to spite the bank and the next owners. Be prepared to do a lot of repairs. This isn't always the case, but just think about it, you have been working your ass off (or stealing your ass off) to buy this home. The bank is going to seize it, leaving you without a home or any of the equity that you should have built up, all that money that you have sunk into the home is now gone, never to be seen again, you have to start all over, only this time with shitty credit. On top of that, remember that sub-prime interest rate that bank gave you that shot up? Ya, that'll piss you off. If you are pissed off about losing your home, most people will make it as hard as they can on the bank and the next buyers, as in they take out the frustration on the home.

I'm not saying this is always the case, but just think about it. Foreclosures can be good deals if you find the right one, I'm just saying be cautious and check out the home, make sure you have a good thorough inspection done.

fcbayern is correct, this is still a buyers market, so there are plenty of good deals out there. My parents moved last year when the housing market was even worse and they were only about to get about 70% of what the home is actually worth in a normal market. He is also correct that location is everything. My parents moved to a smaller, crappier, older house and paid twice as much just because of the location.

[Scalliwag]

Like I said in chat, a lot of people who are having their homes foreclosed on trash it before they leave...to spite the bank and the next owners. Be prepared to do a lot of repairs. This isn't always the case, but just think about it, you have been working your ass off (or stealing your ass off) to buy this home. The bank is going to seize it, leaving you without a home or any of the equity that you should have built up, all that money that you have sunk into the home is now gone, never to be seen again, you have to start all over, only this time with shitty credit. On top of that, remember that sub-prime interest rate that bank gave you that shot up? Ya, that'll piss you off. If you are pissed off about losing your home, most people will make it as hard as they can on the bank and the next buyers, as in they take out the frustration on the home.

I'm not saying this is always the case, but just think about it. Foreclosures can be good deals if you find the right one, I'm just saying be cautious and check out the home, make sure you have a good thorough inspection done.

fcbayern is correct, this is still a buyers market, so there are plenty of good deals out there. My parents moved last year when the housing market was even worse and they were only about to get about 70% of what the home is actually worth in a normal market. He is also correct that location is everything. My parents moved to a smaller, crappier, older house and paid twice as much just because of the location.

I know a guy that got foreclosed on and he poured cement in every drain in the house. So before you buy a foreclosed house check the drains No telling how much it would cost to fix since all the pipes are running through the foundation.

[McLovin600]

wow i didn't think that was the reason for things Ive seen. I guess that explains this house I saw with 3 huge aquarium tanks just sitting in them middle of the living room on the firts floor. they must have just left it all there with water and fish before they moved out. needless to say, there was a smell that probabbly wasn't goin away any time soon.

[Tyler]

Yeah I know all about checking out the house first, and to hire a personal inspector to look things over before bidding. I'm not looking for anything major, but I'd like a 2-3 bedroom condo/townhouse. I've found a few in the Tallahassee area ranging from $9,000 to $45,000 listed as foreclosed and owned by the bank, not by the realtors. What are the chances of 100% financing on a foreclosed home? Would you still need the min. 3% (preferably 20%?).

[BBKakes]

FC's are running rampant in florida, especially in over developed areas such as Jacksonville, Tallahassee, and my personal favorite, Clearwater. Price depreciation has given these areas a serious bitch slap and I think that this will continue into the end of Q4. From that standpoint, it would be wise for you to wait and watch prices. Unless you have enough money to put 25% down, I'd worry about financing first. Credit guidelines are still tight and institutions are recluctant to lend in areas that are currently experiencing loss severities that exceed 80% (meaning that if the bank lended 100K for the house, they are only getting 20K back after the sale). If you see something that is in your dream location, picking it up now might be a good thing since the big cash will swoop everything up from the bottom when prices get attractive enough.

Also, Scalli speaks the truth about properties that have been vandalized during eviction. Concrete down the pipes, broken windows, missing electrical, and worse are all entirely possible and have frightningly become the norm. In theory, the bank would have fixed this already before sale or adjusted the price or offered a cost share and disclosed this issue upon determination. Anyone who buys property in a situation where such items were not disclosed have serious recourse against the seller. Banks don't want this to happen, so you should be ok. Regardless, it never hurts to be too safe.

[BBKakes]

..What are the chances of 100% financing on a foreclosed home? Would you still need the min. 3% (preferably 20%?).

As I alluded to in my previous post, slim to none. 3% down means that most likely this is an FHA related program which will cost you around a point along with having to shoulder MI. We're not talking big dollars in terms of what you'd be paying for this type of loan upfront (based on the values you've shared), but in terms of scalability I think its still alot to pay for a loan. Everyone always talks about the interest and MI being tax deductable, but that doesn't mean you're going to get every dollar of interest and MI back in your tax return. Also, hopefully you are working, have great credit (720+ FICO) and haveparents (I'm assuming you're a younger guy) that can cosign. Every little bit helps.

[TheScotsman]

Like I said in chat, a lot of people who are having their homes foreclosed on trash it before they leave...to spite the bank and the next owners. Be prepared to do a lot of repairs. This isn't always the case, but just think about it, you have been working your ass off (or stealing your ass off) to buy this home. The bank is going to seize it, leaving you without a home or any of the equity that you should have built up, all that money that you have sunk into the home is now gone, never to be seen again, you have to start all over, only this time with shitty credit. On top of that, remember that sub-prime interest rate that bank gave you that shot up? Ya, that'll piss you off. If you are pissed off about losing your home, most people will make it as hard as they can on the bank and the next buyers, as in they take out the frustration on the home.

I'm not saying this is always the case, but just think about it. Foreclosures can be good deals if you find the right one, I'm just saying be cautious and check out the home, make sure you have a good thorough inspection done.

fcbayern is correct, this is still a buyers market, so there are plenty of good deals out there. My parents moved last year when the housing market was even worse and they were only about to get about 70% of what the home is actually worth in a normal market. He is also correct that location is everything. My parents moved to a smaller, crappier, older house and paid twice as much just because of the location.

I know a guy that got foreclosed on and he poured cement in every drain in the house. So before you buy a foreclosed house check the drains No telling how much it would cost to fix since all the pipes are running through the foundation.

That guy is an ass
Typical low-class behavior. Repair will only add to the $ they are going to sue him for in the end.

He buys something he can't afford, then destroys it because he can't live up to the agreement he signed. First he signed to make the payments, and failed. Second he signed to maintain, and protect the property, and willfully broke his word out of spite. His word is worthless at best. Just another greedy SOB that thinks he is entitled to something he didn't earn

[clibinarius]

You know...vandalism upon leaving a house such as that should be a criminal offense...

[BBKakes]

You know...vandalism upon leaving a house such as that should be a criminal offense...

Very true. A couple of things:

1. This type of behavior is so common on FC's that banks don't have the money to pursue recourse with each and every one of these borrowers.
2. These borrowers are not worth anything anyways so whats the point.
3. Secondary Marketing execution (and this depends, but I'm not going into further detail unless asked) protects the lender from losses related to the property's vandalizm.