HELP! Looking to purchase a home how difficult is it really to bid on one in foreclosure?

Asked by Angela Toliver, Mansfield, TX Sun Jul 20, 2008

I don't know if I should get pre-qualified although I know my price range. Are the lenders tougher when it's a trustee sale? And what is that?

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Carol Pease,…, Agent, Austin, TX
Mon Jul 21, 2008
Wait until after the trustee's sale. There may be liens on the property other than the mortgage. Get pre-approved while you are waiting. The bargain should be there after the foreclosure happens and not before.
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2 votes
Bruce Lynn, Agent, Coppell, TX
Mon Jul 21, 2008
#1. Get prequalified.
#2. If you are getting a loan you likely will not be able to purchase at the trustee sale.
This due to the winning bidder normally needing to pay cash within a couple of hours.
#3. You can buy an REO which is bank owned property they bought back at auction and put back on the market.
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2 votes
Ronda Allen, Agent, Plano, TX
Mon Aug 4, 2008
Foreclosures aren't always the best way to go. In many cases, the previous owner who lost the home was in a bad loan. If they rolled in closing costs, they may owe more to the bank than the house is actually worth on the open market. And, if there are condition issues, repair bills need to be taken into account. Banks want to recover their fees and make profit, too. Get with a Realtor who can show you all of the available homes. I've found that many buyers think they want a foreclosure because it sounds good to them. But, when they start looking and comparing, they find some other home that suits their needs better and is more move-in ready. Realtors will put their negotiating expertise to work for you and get you the best deal possible on the home. Many of the foreclosures in DFW were caused because buyers without Realtor representation bought new construction and went into a bad loan. We help people avoid those pitfalls.
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1 vote
T.E. & Naima…, Agent, Dallas, TX
Mon Jul 21, 2008
Trustee sales are cash only. Sorry.
You can still try to get a property prior to the actual foreclosure auction by the trustee. If you know that a property will be foreclosed, take an offer to the owner that will pay off the loan. No, it won't be as good a deal as buying the REO later after foreclosure.
Your offer could be below what will pay off the loan -- this is referred to as a short sale, because the proceeds are short of the loan balance.
Many properties, not all, that will be foreclosed are listed at attractive prices by Realtors. The Realtor should get advice from the mortgage company what price range will be accepted if below the loan balance. Banks are more flexible these days in such cases, if they have independent verification of the current owner's financial predicament and independent verification of the market value of the property when sold in distress. These confirm the likelihood of foreclosure and likely sales price after foreclosure.
Banks don't really want another REO that they have to sell, especially if you will buy above their cost to hold it in inventory.
Ask your Realtor to give you some listings that fit within your budget, and then make some offers. You must be prepaired to close in a couple of weeks. Most lenders can accommodate you on that.
Your budget should be backed up by a pre-qualification by a loan officer.
Just to be clear on this -- even if you were pre-approved for a loan, you cannot buy from the Trustee except with cash or what we call "good funds", which includes cashier's checks and money orders. The Trustee never owns the property. Prior to the foreclosure you deal with the current owner and his bank if a short sale. After the foreclosure, you deal with his bank through whichever Realtor the bank uses to list REO properties.
So, yes, get pre-qualified.
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1 vote
Mark Chovan, , Frisco, TX
Tue Jul 22, 2008
A trustee represents the Bank, and is typically an attorney. You have to have cash to bid on pre-foreclosures.
If you want to purchase a foreclosed REO, you will have to submit proof of funding with a contract. Pre-Qualifying letter is required along with a contract.
0 votes
Janine Love, Agent, The Woodlands, TX
Sun Jul 20, 2008
If you are trying to buy a home AFTER it has been foreclosed on, and is on the market, listed with an agent, you SHOULD get your pre-approval letter ready now. You will need it.

If you are looking to purchase a home through a Trustee Sale on the courthouse steps, you will need CASH (cashiers check) to purchase the home.

Buying a home AFTER it has been foreclosed on is pretty much like a normal real estate sale, with the difference of being sold AS-IS.
0 votes
Debt Free Da…, , 85260
Sun Jul 20, 2008
I think you need to get prequalified first, just to see what you can do. If you are going to be at a trustee sale, you need to have cash in hand. Financing wont work. You can buy a home after it has been foreclosed with financing however.
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