Home Buying in Charlotte>Question Details

rhsjohnson23, Home Buyer in Charlotte, NC

Purchasing a foreclosure or auction home

Asked by rhsjohnson23, Charlotte, NC Mon Feb 24, 2014

How do you purchase a foreclosure home?
How do you win a home auction?

I know these are basic questions, but I am interested in that market, but have no idea where to begin...

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To begin with I've been buying renovating and flipping homes for 35 years+/- I've been a full time Broker for almost 25 years and not once have i ever bought a foreclosure for myself. The reason is simple, there's rarely an adequate risk/reward ratio.

Auctions and Foreclosures sales are very different processes and despite anything that you may think to the contrary if you do your homework you'll very quickly realize that in general neither offers any particular deal and both increase a buyers risk. I've attached a link below that has a lot more information on Foreclosures and while auctions are different the downside is very similar.

Auctions come in three basic varieties, one is an auction on the court house steps, this is the most risky and unless you have pad to have a title search done prior to making a bid, you run the risk of assuming the prior owners debts for property taxes etc. Another style is an auction held at the property itself, in these cases there generally little risk for inheriting tax bills, and most often you can inspect a home before the auction date. With some of these auctions you can use financing, while others are cash only. In both instances Buyers need to be prepared to pay cash and there's generally a 5% buyers premium that you are charged above the price you bid. Both these auctions come in two basic varieties, "Absolute" meaning highest price get the property regardless of what that price may be, or "Reserve" in which the seller has set a minimum price and unless that price is reached they are under no obligation to sell.
Finally there are Auction websites, which to me are among the riskiest. Their cash, the buyer still pays a premium, no financing is permitted in most cases and you rarely are given an opportunity to inspect the home, have title work done etc. I personally believe these are incredibly risky to consumers and would not be surprised if sooner or later these type of sales are outlawed once various Government entities realize the risks posed to the buying public.

Foreclosures are much more straightforward procedure wise and buyers, do have a 10-14 day period in which to have the home inspected. Here the biggest problem that i see over and over again is that buyers underestimate what it's really going to take to make any required repairs.
1 vote Thank Flag Link Mon Feb 24, 2014
Foreclosures aren't necessarily "deals" anymore. Everything in the Charlotte area is selling at market value these days, given the low inventory and high demand.

If you'd like help with your search, let me know!

John Siddons
john.siddons@bhhscarolinas.com
http://www.SearchCharlotte.com
1 vote Thank Flag Link Mon Feb 24, 2014
The best place to start is always to educate yourself! If your desire to buy foreclosures or auctioned homes for investment purposes, two excellent books I suggest you purchase, read, highlight & then read again are:

"HOLD - HOW TO FIND, BUY, AND RENT HOUSES FOR WEALTH" by Steve Chader et al

"FLIP - HOW TO FIND, FIX, AND SELL HOUSES FOR PROFIT" by Villani & Davis

As an aside, if you are thinking about purchasing foreclosed homes on the courthouse steps - don't bother. Almost without exception those homes go back to the bank. What most folks do not know is that the opening bid is ALWAYS the amount owed on the note, which, in most cases, is more than the home is worth. Should you find one with a smaller note and win, you will be buying a home sight unseen - NEVER EVER a good idea!

Best success!

Kathleen Turner, ABR, CRS, ePro, MPA, Certified Paralegal
The Kathleen Turner Realty Group
Keller Williams Realty
704-609-2688
http://www.BuyAHomeInCharlotte.com
0 votes Thank Flag Link Mon Feb 24, 2014
Every foreclosure servicing company has their own set off guidelines for the purchase of their foreclosures that are on the market. If your question is concerning buying a property at the courthouse auction there are requirements there also. As others have noted foreclosures are coming on the market At prices that are fair market value. As you are buying these properties in as is condition they do not always offer the best value
0 votes Thank Flag Link Mon Feb 24, 2014
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