Is buying a foreclosed home bad karma?

Asked by Rob, San Diego, CA Wed Jan 23, 2008

(a bit of a rhetorical question)
It's sad to know that someone lost their home and had to foreclose. I feel for them, but should I feel guilty for benefiting from someone else's misfortune? Some might argue it's just business, and I tend to agree. But do you need to worry about former owners being bitter? A relative of mine bought a HUD home years ago and the people trashed the place before they left, literally ripping out appliances, light fixures, and the like. I assume this is uncommon.

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Perry Hender…, Agent, Austin, TX
Wed Jan 23, 2008
BEST ANSWER
FORECLOSURE REALITY CHECK.... Seasoned investors who buy foreclosures know the REO manager at the bank and get "off market" deals. They never have to bid or find a place to learn what's available.

FOR ALL OTHERS: The only "sellers market" in america is the foreclosure market. Don't expect any deals from a foreclosure as the bidding process brings 20-30 people to bid on almost every deal. A deal that was already priced at market. For government foreclosed homes, by law, they have to be priced "at market".

The REO manager has a short list of "cash/close in 2 day buyers", they always get the first right to bid. Then they have to wait for the "public auction" Which drives up those prices. After a 30-60 day period. Then the REO picks the best bid. Sometimes, only sometimes does a REO manager take a property directly to a buyer he knows peronsally. Why should he, he has a bunch of people bidding and driving up the prices.

My REO manager friend likes to joke about all the "first timers" who continue to drive up the bid when they don't hear anything from the bank. Every time I see the "how come I haven't heard from the bank about accepting my foreclosure bid after 30+ days" on trulia, I have to let out a chuckle because he's so right. For those newbies, this is real. They know that when you don't hear from them that a large percentage of people drop a second or third offer higher than the previous one. **WARNING, YOU ARE BEING TAKEN ADVANTAGE OF HERE**

You want a deal on a property right, everyone wants that.... So the moral of this story is:
1. the 60 days you have to wait to hear from a REO, you could have made 2 or 3 better deals with a property that has been on the market for a long period of time. Any realtor can help you drop a crazy offer.
2. You are attempting to make a deal in a house covered in a cloud of bad energy, don't be surprised when it rubs off. Personally I stay away from these for this reason entirely.
3. One way to get a deal is dropping a hand written note on ANY house in a neighborhood you want to buy that says "my girlfriend and I want to buy a house in this neighborhood and yours looks cute from the outside. Do you know anyone that is looking to sell?" I always get responses, better prices and positive energy into the home.
2 votes
It doesn't take 60 days-that sounds like a short sale. REO companies always respond within 3-4 days in my experience. Foreclosures are among the smoothest transactions.
Flag Thu Sep 5, 2013
Jennifer Nav…, , Chandler, Gilbert, Mesa, Tempe, Phoenix, Scottsdale, Apache Junction, Queen Creek
Wed Jan 23, 2008
Great answer, Perry-- When properties go to auction, I'm not seeing the 'bargain prices' there versus people picking up homes in short sale/pre-foreclosure or REO. There are too many people at the auctions throwing in bids and raising that price. Auctions aren't all that 'special' for "good deals".

Angry "ex" homeowners are not uncommon. Angry tenants are not uncommon either. I've seen things like cement mix put down drains, wiring cut/hacked up, a wall with a hole punched in and filled with cat feces, stashes of dirty diapers hidden in backs of cabinets... I could go on and on.

Now, as a question of Karma... Think of it this way. If that home sat there, unoccupied, what would happen? The bank isn't going to send housekeepers and landscapers to maintain it. That vacant home is a TARGET for crime. There are valuable appliances, fixtures, copper tubing.... all kinds of things in there that a thief could come in and steal. Squatters/vagrants/drug dealers may take up business in that vacant house. Windows are broken, landscaping gets worse and worse, fixtures are ripped off... and then what happens? Would YOU want to buy/own a house that was next door to a dump? That vacant home that turns into a neighborhood blight--- a blight that increased your crime risk in your neighborhood. It is decreasing that whole neighborhood's property values FAST. When I go to preview or show properties that have been vacant for very long periods of time, I am always very weary... You never know what to expect.

So, no. I don't think buying a foreclosed home is bad karma. I think of it as a positive thing--- you are helping the community out by doing something with that house.
2 votes
Alex Amaro, Agent, Sacramento, CA
Wed Jan 23, 2008
Rob,
I started in real estate as an investor buying/flipping foreclosures. Before I started I always wondered about these people myself and whether I was making an "honest living" or preying on their misfortune. I quickly found out that many of them were very good people that just had bad circumstances and hard ships that got them into that trouble. And I also learned that for many of these people there was nothing that could be done to save the home. What I chose to do was deal with all these people fairly and honestly and respectfully. I never had a problem or had anyone damage anything or come back disgruntled.
Your relative probably had someone that was either just a "bad apple" and wanted to go out with a bang or someone that was just mistreated and disrespected. To sum this up, I think it is fine to buy a foreclosure. If these people could stop the foreclosure, they would. It's sad, but true.
Good luck!
I hope I was able to help.
If so, I'd appreciate some feedback.

Sincerely,
Alex Amaro
Web Reference:  http://www.alexamaro.com
2 votes
Monica Hess,…, , Lexington, KY
Wed Sep 4, 2013
The bad Karma is on those who were foreclosed on. Each person pays their own Karmic debt. However, a house can either help someone, or hurt them; It can either fulfill their bad Karma or encourage the good Karma they have earned, to help them. So, I would suggest that before you buy a foreclosure, you have a Feng Shui Master check the chart of the house. There's a reason someone who needed that kind of Karmic payout to pick a house that would bring them to that end.
0 votes
Haleilove88, Home Buyer, Slidell, LA
Tue Sep 3, 2013
A long time ago, my great grandpa bought 72 acres of land for a great deal through a foreclosure that happened to a well known family after they had lost it due to over spending at Christmas. Two generations later, my dad almost lost the land and had to pay a huge price by going to work a job in Alaska when I was young to keep it. He had put it up for collateral to buy a business that went under unexpectedly as soon as the land was gambled with. I don't like foreclosures because I think the land in this case had bad karma. The old owners were bitter and they could have held attachment towards it. The fact you are asking this means you may feel the same. My advice is go with your guy instinct, everything has a price do not try to get something that has been taken from someone else...
0 votes
Haleilove88, Home Buyer, Slidell, LA
Tue Sep 3, 2013
A long time ago, my great grandpa bought 72 acres of land for a great deal through a foreclosure that happened to a well known family after they had lost it due to over spending at Christmas. Two generations later, my dad almost lost the land and had to pay a huge price by going to work a job in Alaska when I was young to keep it. He had put it up for collateral to buy a business that went under unexpectedly as soon as the land was gambled with. I don't like foreclosures because I think the land in this case had bad karma. The old owners were bitter and they could have held attachment towards it. The fact you are asking this means you may feel the same. My advice is go with your guy instinct, everything has a price do not try to get something that has been taken from someone else...
0 votes
David Chiles, Other Pro, Los Angeles, CA
Tue Nov 30, 2010
Thank you for your question about the ethical dilema of purchasing a foreclosure. Please be advised that it is ok to feel bad for a homeowner who has gone through the foreclosure process, but the reality of the situation is that purchasing a foreclosure home is the best way to help the homeowner and the economy move on.
0 votes
Jessica, , Virginia
Tue Nov 30, 2010
Check out my post, Buying a Foreclosed Property: An Internal Struggle?

... How can one rationalize this and come to peace with a decision to purchase a foreclosed home? Here is the silver lining: If you get a great deal, the only one you are “sticking it to” is the bank. And by buying a foreclosed home you are taking a vacant house off the market. This is great thing for the neighborhood and the economy...

http://homebuyersblog.wordpress.com/2010/11/09/buying-a-fore…
0 votes
Monica Hess,…, , Lexington, KY
Wed Feb 18, 2009
People do get revenge...often. But, buying a foreclosed house is not taking on bad karma.
What it may be is taking on a house that will not give support for making money. Some houses are made in such a way that they will cause even the best business people to have trouble with money. Other houses may have been unlucky for the people simply because they did not know the right way to use the house. They may have used an area bad for money...when others will come in and avoid that area alltogether.
So, before you buy a house where the people could not pay the mortgage, be sure to have a competent, flying star feng shui consultant check it out. Check their credentials, too. There are a lot of pretenders out there.
Web Reference:  http://www.monicahess.com
0 votes
ally, Home Buyer, San Francisco, CA
Wed Jan 23, 2008
As a buyer, I understand what you are talking about. I am paranoid that the previous owner's bad luck will come upon me too. Whenever I go see a house, I always do a feng shui analysis anyway. Some of the forclosed homes have major feng shui problems, in addition to damage from the previous disgruntled owners. Just be cautious. Foreclosed properties probably aren't the best deal, but if you really like the home, it is worth considering.
0 votes
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