I know that purchasing foreclosed properties is a difficult process, and there's a bit of an insider mystique

Asked by The Chuckster, Dutchess County, NY Thu Apr 17, 2008

about it....but if someone were determined to get in the game what's the best way to learn how the process works? Also, is it true that by the time properties go to REO status, they are no longer a good deal, and it basically means nobody wanted it at auction so it now sits in MLS?

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Curtis Darra…, Agent, Poughkeepsie, NY
Wed Aug 6, 2008
Hi Chucks,

You've gotten some great info here, feel free to call or email me for more info. I specialize in Bank Owned REO's.

Curt Darragh
Associate Broker
Houlihan Lawrence
Web Reference:  http://www.CurtDarragh.com
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Donald Mituz…, Agent, Chappaqua, NY
Sat Apr 19, 2008
Sounds like you have a plan and are proceeding in a sensible manner. Actually, you are in an ideal position in this market to make the most of it. One last thing you haven't touched on is short sales. They can provide some good bargains, but there are certainly some caveats.

Good luck,
Web Reference:  http://www.nyhomeseller.com
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The Chuckster, Home Buyer, Dutchess County, NY
Sat Apr 19, 2008
Thanks for the replies, and encouragement, I really appreciate it. I've done a bunch more research (the nice folks at the county clerk's office know me by name now :-)

I'm going to continue to research this and won't make a move until I understand the end-to-end process

My basic game plan is to find one or two properties that are priced below market, need some work (I do all my own construction), and would return positive cash flow on rental. I can do cash, no contingencies, so I'm ready to move IF and WHEN the right property comes along. I need some tax leverage and also limited liability so I may talk to a good lawyer and get set up as an LLC.

Lot's more to learn...I find this very energizing and can't wait to hit the "right one" :-)

Thanks again!

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Donald Mituz…, Agent, Chappaqua, NY
Sat Apr 19, 2008

You may find it a much better deal to wait until it's REO. Once the bank owns it, they usually want to unload. Someone in my office who put a foreclosure on the market two weeks ago on a Thursday had 10 offers by Monday morning. It is selling for over asking and all cash. The reason people don't want them at auction is the bank is bidding to cover what they are owed in most instances and many times the house isn't worth it. I speak not just from more then 15 years as a Realtor, but I'm sitting here replying from my own foreclosure that I bought for less from the bank then I would have had to bid at the court house.

Foreclosures can be a good deal at the court house steps, and they can be a much bigger nightmare. Don't expect to do ANY kind of inspections buying at the court. That not only means you won't be able to do a general home inspection, but it would be very unusual for you to be able to inspect septic, well and underground oil tank(S). You bid, you own it.

One a house gets listed with a Realtor the house is usually priced at a discounted market price taking into account the house probably needs work. You can usually get a good price if you have a decent idea of what you are doing and have a good agent as guidance.

When buying a foreclosure keep in mind three things, location, location, location. It holds just as true with foreclosures as it does with every other part of real estate. You buy a house for a good price in a dumpy neighborhood and when you fix it up, it's still in a dumpy neighborhood.

Don't be discouraged. You can still get a great deal with foreclosures. Don't buy anything just to buy something, but if a really good deal comes along you have to be ready to make a move immediately and can't be shy if multiple bids come in to bid over asking price. If I can be of any more help, don't be afraid to ask.

Good luck,
Don Mituzas
Licensed Associate Broker
Prudential Serls Prime Properties

Web Reference:  http://www.nyhomeseller.com
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Dorothy Neum…, Agent, Westmoreland, NY
Thu Apr 17, 2008
Chuckster, there's really no mystique about it. But it helps to educate yourself on where to look for them. In New York, HUD homes are listed here: http://nhmsi.com/. They are available for the first two weeks to owner occupants, and later to investors if they haven't sold during the first two week period. Most bank foreclosures are eventually listed in your local MLS. It works better when trying to purchase foreclosures if you do not need seller concessions for closing costs.

It is NOT necessarily true that by the time properties go REO they are no longer a good deal. At the auction, lenders are attempting to recoup the full amount owed them, including attorney fees and interest. Sometimes they will take less at the auction; more often, they won't. If the homeowner was upside down on their mortgage (owing more money than the house is worth) the price at auction may not be a good value. Seasoned investors may attend the sale anyway, on the off chance the bank will deal there. But they will sit on their hands if the price is too high.

When the lender brings the property back on the market as an REO, they have received the opinion of one or more real estate brokers as to the actual MARKET VALUE of the home, taking into consideration the repairs that may be needed. If they want to unload the property quickly, they will offer the home for less than market value.

If you, as a savvy investor, have been watching for this home to come back on the market, you should be prepared to act quickly once it is again available. If it is priced low, multiple offers may be received in short order, and the home may sell for more than the listed price.
Web Reference:  http://pondrashomes.com
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