Buying a Foreclosure Property

[Duff2]

They are auctioning off some houses at foreclosure at the courthouse. A couple are in my neighborhood and seem like good fixer uppers. Any advice on whether to participate and bid on one of these?

[Jim]

Learn of any special deed/title restrictions benefiting the current owners. In some areas I believe a person can recover their property lost to a tax sale for a period of up to two years. Knowing in advance might save you from sinking too much cash into something not 100% yours yet.

[John Grabowski]

Try to bid only on units that are unoccupied. It can cost a lot of time and legal expense to get the occupants out.

[dpb]

Yeah...be dam'ed wary. There can be all kinds of other (besides tax) unsatisfied liens, unproved title issues, even possible environmental or other things you can get into.

While sometimes it's as simple as a single homeowner in default, usually by the time it gets to a tax sale there are a myriad of problems that have built up over a long period of time and may be extremely convoluted.

I'd strongly suggest consulting local attorney and some real estate folks in the area who have some experience for some help protecting yourself rather than just jumping in on your own.

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[ransley]

Have you rehabbed a house, often a junk is better torn down. Getting a junk to code can mean redoing everything. Talk to an inspector or someone in your area that does it. I would want to see what I am buying and know local codes.

[Bubba]

If you havent bought at auction before and you havent rehabbed before you may just learn a very expensive lesson. You need to know the hidden costs in the auctioning process particularly after the purchase. Next you need to know how much you will be putting into the fix up process. Then you need to know what the property will be worth after the repairs. Keep in mind that properties are not worth what they were just two years ago. Bubba

[caroline]

replying to Duff2, caroline wrote: Hi, Here are few things to keep in mind while buying a foreclosed property:-

1. Get an approval from a lender who has verified your income and assets.
2. Do some research on foreclosed properties and recent trends with a property value in that area.
3. Do investigation by self and make your offer on agreeable outcomes
4. Determine potential repairs and their costs
5. Remember that you have the high ground in arrangements with respect to the bank paying closing expenses and making repairs. Thanks!!

[trader_4]

Besides the fact that the thread is 9 years old, the poster also said that the properties they are considering are being auctioned at the court house. That is the final act of the foreclosure process and you don't have the option of negotiating with the bank about closing costs, repairs, or anything else. Also, being qualified for a mortgage is pretty much useless, you need cash at the auction, you typically have to pay off the rest of the full auction price within days thereafter too.

[gfretwell]

Exactly right. Also be sure what your state laws are about other encumbrances. In Florida most of these will be wiped out in the auction but be sure. Tax liens will still survive the auction and there may also be code enforcement liens that survive. Usually mechanic liens and other bad paper are wiped out in the auction and the people with surviving paper will have to pick over the proceeds.

Bear in mind, the bank may open the bid with what they are owed and you might not see that bid until you match it. This is like Ebay. High bid is hidden until it is matched.