Foreclosure in 95828>Question Details

Ricky Eaddy, Home Buyer in 95821

What does it take to buy a foreclosed home?

Asked by Ricky Eaddy, 95821 Tue Mar 11, 2008

Do I only need to pay the amount owed? Does the house go up for auction? If it does, how can I bid on it????

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I would like to clarify the advice Elizabeth gave about buying "directly " from the bank. The " bank" that owns the property will not deal directly with the consumer. the consumer must be represented by a real estate agent. The bank is also represented by a real estate agent. So there are middlemen involved when buying bank owned homes.

The only way to buy directly from the bank is if you are a cash investor that is purchasing in bulk, 20 to 100 or more houses at a time. Generally these types of investors are other corporations with millions of dollars in cash available.

There are many types of distressed homes. Bank owned homes are called foreclosures. These are also called REO's. To confuse you, the home may be purchased on the courthouse steps at the time the bank is scheduled to take title in an auction process, which is also called foreclosure. Then there is the pre-foreclosure, which is also know as short sale, foreclosure pending, and defautl period. The "short sale / pre-foreclosure" is the time before the owner has formally lost the house to the bank. They may still be living in it, or they may have voluntarily moved out. The bank cannot evict them until after the bak takes title to the home.

To confuse you still further some houses are offered in secondary auctions that are held after the bank has acquired title. So not all auctions are of the all cash at the courthouse steps variety.

Do you need to pay the amount owed? No. the amount owed is irrelevant to the market value. You need a real estate agent to guide you in bidding because there are hundreds of different companies representing hundreds of different banks. each house has a different set of forms called addendums that have to be interpreted for you. The most efficient "auction" for both the banks and the buyers is the MLS.

By using the MLS, you and your agent can review 99% of the properties available for purchase including bank owned at full retail prices, bank owned - priced and available for auction style bidding,

The MLS also has listings of the short sales and pre-foreclosures as well as builder close-outs, probate sales, bankruptcy sales, relocation buyouts, and even normal human being sellers that need to sell for personal reasons.

You and your agent then choose a few house to go look at that meet your wants and needs list. Then you and the agent discuss which one (s) you want to make offers on . You may be competing with other buyers.

If the home appears to be priced very low in comparison to similar homes you might be competing with many other buyers. Yes even this market. These MLS multiple offer situations are also known as "auctions" - This often results in a sale price that exceeds the list price. I can prove this.

The real estate market is very efficient for sellers, Becasue of wide exposure to most serious buyers, sellers are usually able to receive a high percentage of current market value for the houses. The key word is "current" market value. The reason why houses are such deals today is that the current market values in Sacramento are 30 to 50% below the market values of the peak of the market 3 years ago.
1 vote Thank Flag Link Wed Mar 12, 2008
Jim Walker, Real Estate Pro in Carmichael, CA
MVP'08
Contact
Great question for todays market...... In the past months, you may have had encountered the term “foreclosure” a dozen of times especially with the current crisis in the national housing market. If you are lucky enough not to have any problems with your mortgage payments, you should still try to understand how foreclosure works – just in case. For starters, foreclosure is the repossession of a property by a mortgage lender because the owner failed to fulfill his mortgage payment obligations.
These properties can be listed with very aggressive prices, in some cases we are seeing multiple offers because of this. The inspection period for a buyer can be moved up from the standard 17 days in a normal transaction to 10 or even 5 days depending on the bank. In most cases the banks list these properties "as is" ..... You still have the right to your inspections but need to understand that the bank may not agree to repair anything. If a buyer can not close escrow on time there can be penalties ranging from 50.00 per day to 150.00 or more in some cases. If you are looking to purchase a bank owned home they can be a great bargin but you should work with a buyers agent who knows what to look out for and help guide you...... thank you for your question I hope this helps
1 vote Thank Flag Link Tue Mar 11, 2008
Hi Ricky, I know you're not in our area, but I thought a note about our market may help just for information purposes. My team was a top listing agent/seller of foreclsures in the DC Metro area last year and now working into this year. In short, our sellers, the banks, order broker price opinions (BPO's) and ask us to list based on the market value. Typically they will price it anywhere from 10-20% below market for a quick sale, but their main goal obviously is to try and make as much money as they can. The key to getting a contract ratified by the bank is to plan your offer well (and quickly after list) and have a full pre-qualification letter ready to go. Now, what I mean by planning your offer...the banks are most concerned about the net they will receive if and when a loan goes through. So, cash offers are obviously GREAT, but when that isn't an option, then they look at whether appraisal and inspection will actually pass for other types of loans like FHA and VA. Ask your real estate agent for more info on why the type of loan is so important.
Now, as for auctions - the houses sometimes go up for auction right away, or they go up for auction if they have not sold quickly when listed with an agent. At least that's what's happening here. To bid, just find out the auction house, go to their website and read CAREFULLY their criteria for bidding. And know this, you can get your real estate agent to register and represent you at auction at no cost to you in many cases. Just look for the "Registered Agents" section or something like it on the company's website. I wrote an article recently on my blog about what some of the houses were going for in our area compared to what they were listed for months ago. A good deal will range in the 30-40% off of list price. You can read about that at http://jenniferyounghomes.blogspot.com/ . Just go down about six articles to find it. Happy hunting....I hope you find a great home!
0 votes Thank Flag Link Tue Apr 28, 2009
The ability to get indemnified by the seller. This Sub Prime debacle is only starting to rear its ugly head and homeowners people taken will be coming back soon to reclaim the home they lost to a Lender.
0 votes Thank Flag Link Tue Apr 28, 2009
The ability to get indemnified by the seller. This Sub Prime debacle is only starting to rear its ugly head and homeowners people taken will be coming back soon to reclaim the home they lost to a Lender.
0 votes Thank Flag Link Tue Apr 28, 2009
The ability to get indemnified by the seller. This Sub Prime debacle is only starting to rear its ugly head and people screwed will be coming back soon to reclaim the home they lost to a Lender.
0 votes Thank Flag Link Tue Apr 28, 2009
The ability to get indemnified by the seller. This Sub Prime debacle is only starting to rear its ugly head and people screwed will be coming back soon to reclaim the home they lost to a "suck-ahh" lender.

admin@borrowerhotline.com
0 votes Thank Flag Link Tue Apr 28, 2009
I've got to disagree with Annie about not having a first time homebuyer buying a bank owned property. In
Sacramento there is such a selection of newer homes at fantastic prices. As long as the buyer has a knowledgable agent, for advise and help in the process - and if it's under $200k, you'll most likely be in multiple offer situations if it's a newer house in a subdivision. Many times the lender will already have done a termite report which can be given to buyer. Buyer has option of getting home inspection - but they need to have one lined up quickly as inspection periods are short on bank owneds.

I've seen some pretty happy first time homebuyers recently. They were all but priced out of the market
2-3 years ago.
Web Reference: http://www.annaboyd.com
0 votes Thank Flag Link Mon Apr 27, 2009
MY advice to you is not a good idea to buy a foreclosure if you are first home buyer. Make sure that your agent knows how to handle these transactions skillfully and is willing to take you step by step throughout the complicated and lengthy process. It is really not worth to buy at all.
0 votes Thank Flag Link Wed Nov 5, 2008
Ricky, the property you have in mind is it a family member or friend you are looking to bail out or help refinance? In many cases, friends come to the rescue to save the house...Are you trying to keep the current tenants in place or do you want the property vacant...
0 votes Thank Flag Link Mon Aug 25, 2008
Ricky, both William and Elizabeth are absolutely dead on with their foreclosure advice, hopefully you're logging back onto this site and getting this information! With the constant barage of foreclosure-related marketing from various companies through various channels, it's hard not to believe that there's a deal out there for you! But the simple fact remains that homes tend to sell for market value. If the subject property is a short sale or REO, the price should be discounted when compared to a regular sale.

My best advice is if you're serious about a home purchase, and you need to a mortgage, get approved now! The longer you wait, the higher scores you'll need, the higher your down payment! I can't stress this enough as I turn away most borrowers that I could have approved for a loan just months ago!!

Jeff M
0 votes Thank Flag Link Tue Mar 11, 2008
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