ulySSes

Anyone here ever buy a foreclosure? I'm wondering what the advantages and disadvantages are of buying one. I found one that I'm wanting to purchase asap to flip. I called the listing agent a couple weeks back asking some general questions about the property itself and he was very unpleasant.

Thanks,
Ulysses

chadtx01

iTrader: (5)

The most obvious advantage I could think of is you can buy the house for usually well under market value.

The first disadvantage I can think of is people that usually dont pay their rent or take care of their business dont really take care of their home.

What kind of answers are you looking for. I work in the real estate department at a small bank and i'm working on a loan for a forclosed property right now.

If you have an certain question, I can get you an answer, just let me know.

ZL1SS

iTrader: (4)

I looked into this a while ago and yes there are a few killer deals out there but for the most part they are going for just about or maybe a little less than market value. It seems that the banks have gotten wise and are not selling them dirt cheap anymore. The biggest problem is that if people cannot pay their bills they can't afford to maintain the house so you end up buying a piece of **** that needs ALOT of money to fix up.

BLACKND

iTrader: (5)

When we were looking at houses, we looked at several foreclosures, some of which were killer deals, and they usually looked great on the outside, but 90% of them looked like there had been murders or slaughtering animals inside (no exagerations here) or about 90 rugrats living in them tearing up anything and everything. They are generally not well taken care of. Plus you get no sellers disclosure, so until you have an inspector come in a tell you whats wrong, you have no idea until its too late.

ulySSes

Thanks for the replies. I didn't think about not getting any disclosures. I hope no one has been murdered in the one I'm looking at. I was just looking for tips and advice from any experienced buyers, etc. The one I'm looking at has a solid exterior and the roof is in great shape. It does need sheetrock work and I already have someone lined up that will do it for a good price. I have an appt tomorrow morning for a walk through and if I like what I see, I'm making an offer. I'm just wanting to make a quick flip rather than living in it.

BLACKND

iTrader: (5)

Well, most likely not, but I do recall one house that I looked at, that I really wanted. It was in the heights area of Alvin, one of the nicest areas, on 2 acres. The exterior was perfect. you couldn't tell from the outside, yard was nice and manicured. And it was about 40K less than all the other homes in the area, land size were all the same. Got inside and it was a total wreck. The tile throughout the living, kitchen, dining and foyer were all written on with red crayon, or marker or something. The carpet that led down the hallway and into the 4 bedroom, were streaked with mud, and what seriously looked like blood. Sheetrock was falling down all over, holes in the wall, and what was really scary, was that there was a big hole in the master bathroom shower that had tried to be repaired and tiled over, but the tile was falling down. I don't know what happened in there, but needless to say we didn't buy it. I didn't want to know. lol. Oh and the pool in the backyard was jacked up. I guess it wouldn't be so bad if you are just planning on flipping it, just kinda pay attention to details and see what you look at. I guess my biggest worry with them is without the disclosures, you really don't know what you are getting, it could wind up costing you more than what you can make out of it.

In my dealings with looking at them, the banks don't seem to be very willing to negotiate on price.

ulySSes

That's what I'm afraid of. I'm going to keep my fingers crossed.

distortion_69

iTrader: (20)

FWIW: After my experience, which thus far has ended positively.

The bank doesn't want to deal.. not only do they not want to deal.. when they do finally accept your offer, I had the experience, as well as some friends, where they will take as long as possible to actually get under contract, hoping for better offers. Eventually they will give in though. Don't get emotionally attached.. keep your options open to buy another house if one falls through.

Man, we just went through this ordeal, and I'd make sure you know what your doing before you go in.. things to look for:

Roof - climb in attic.. make sure no signs of water damage are apparent up there, as well as on the ceiling.

Siding - Siding in good shape? Ours was Louisiana Pacific. but we got a good deal.. so it's worth it. It is notorious for dryrotting, but we are putting a cement fiber based siding back on.

Plumbing - Leaks? Water damage.. what type of pipes? ours had copper, and was in fair shape.. flush toilets, try all faucets, look for any water damage as hard as possible.. and if you do find some, be sure to realize the extent of the damage.. the floor underneath, then the next level if it's a two-three story home. Check showers/tubs.. make sure all drain smoothly.. so much to look for, really.

Heating and Air - Very costly.. leave it on.. make sure it gets cold.. then flip it on hot.. inspect any duct work that is visible, and take a look at the model/date on the unit outside.. if it is really old, or something isn't kosher.. not a big deal.. just make sure you get the house for a price that is reasonable for what the house needs.

Water Heater - date, model, etc.. is it new? is it old..

Appliances - Make sure it has an operation stove/refrigerator/etc.
Test all light sockets, all lights, and any electrical stuff you can find in the house.. inspect the breaker, make sure everything looks kosher.

Sheetrock - Holes, cracks, etc.

Floor - Carpet.. probably have to be replaced.. Hardwood floors in good shape?

Cabinets - make sure all is kosher. Foreclosed homes.. not uncommon to have some ghetto cabinets.. don't know why, make no sense.. but 3 of them we looked at needed some serious cabinet refinishing, new doors, hinges, whatever the case may be.

Closets - check closet doors, inside racks, etc. Most foreclosed homes will have all sorts of random ghettoness such as this. Busted *** racks, holes in the sheetrock, doors off track.. very common.. and folks who foreclose don't usually fix it.

Windows - make sure they shut/open smooth.. big sign on the integrity of the house..

Floors - jump on them.. make sure they feel solid, with no flex.

The inspector will cover a bunch of this, but it never hurts to have an idea yourself before you go paying an inspector the money, and kiss it goodbye. Altho it is cheaper to pay someone $250 to tell you that your getting fucked, then to buy it and realize you got fucked.

My suggestion:

Bring a notebook to the house.. write down every possible thing you can think of.. go home, figure up the costs.. and I'd probably double it to be safe...

Now.. things to think about:

You are trying to invest.. without actually having any money.. so this brings several things into the equation that otherwise would not be there if paying with cash:

Closing costs.. if you bought it cash, had no loan.. you'd be saving yourself several grand. Figure this into the situation on bargaining for your house.

Interest.. If you are buying a house to sell for a profit.. and you are making a payment for a year.. figure up almost all your payment gone because you get almost no equity at the beginning of the loan. Also realize you are paying taxes, as well as home owners insurance.. which will not be profit.. You can deduct the interest.. but it won't be a HUGE difference.

Realize when you take on a house.. you will be paying cash for things you didn't think about:

Appraisal
Inspection
Loan application fee's

Doesn't seem like much, but it could make the difference on whether or not it's worth it to buy the house.

All things to consider.. That being said, we close on our house on the 30th, and will be moving in with 29k in equity.. The house doesn't need much.. but had I had a better paying job, I would have probably opted to get a more expensive house, because 10% of 300k is alot more than 10% of 100k (assuming you make that).

Also.. check your state/county/etc.. some places have different taxes/penalties/fees for people buying/selling and investing.. in GA they hit you with capital gains, which can be like a HUGE chunk of your gains.

Luckily we plan to live there for a few years, so this is just a house for us, with benefits.. not a moneymaking scheme.

Peace,
Josh

02ss98C5

iTrader: (1)

Are you planning on flipping it or living in it for a while. If flipping it the housing market isn't that great and with interest rates there is not a lot of money to be mad with the hassle.

goober35

iTrader: (1)

FYI if the bank as accepted your offer it is aggenst the law to accept another offer. Once an offer is in and accepted they are under contract. If said contract is broken then you the buyer is intitled to %300 damages.

<-------Working on Real Estate license

distortion_69

iTrader: (20)

You aren't under contract til you both sign and agree on an offer.

We sent our offer, and we were told over the phone they would have us an answer asap.. well, 10 days later.. they decided to call us and say they'd be faxing us a counteroffer.. Well, it took us 2-3 days to get the paperwork to sign on the counteroffer.

It was clear they were sorta shopping for better offers. We are now under contract. This happens all the time. Banks aren't interested in rushing with your paperwork if you are offering a lowball amount.

In fact, the house was on MLS and the price was lowered and new pics taken in the first few days of the 10 days we waited... this is apparently common for them to take their time on lowball offers, as you can imagine. Banks aren't in the business of losing money.. so the more they can get the better.

I guess what I'm hitting at is.. if you make an offer and they don't accept or send a reasonable counteroffer. I would stick firm with what you offer, and keep looking at the same time. Chances are they will be calling you back a week or two later wanting to get the ball rolling. If not, there's a good chance you'll find a house better or the same anyways.

Peace,
Josh

goober35

iTrader: (1)

You are right. The way you put it in your first post sounded to me like the bank took the offer and said we will take it and then tryed to get more offers in on the house.

Also if there is no anser on the offer the anser is they declined the offer.
Sorry for the confution josh