Looking for a little advice/direction regarding the purchase of foreclosed homes. Anyone do it, anything specific to look for?
Here is the situation. I know of a house that could potentially be foreclosed on shortly. Basically the Registry of Deeds has two recent “foreclosure meeting notices” on file for the property I am interested in. How long does it typically take after the “meeting notices” are filed? What is the next step etc. The intent would be to purchase, rehab and either sell or rent.
Any thoughts/advice would be greatly appreciated.
Replies
My father in law was in realty until his retirement manyu years ago. One of the ways the he made a ton of cash was on properties like you mention.
As a licensed broker and appraiser, he had access to county property records, as well as mortgage records -- including the filings that dealt with potential foreclosures. He watched those like a hawk,
And when he saw one that he thought would be an easy flip, he'd call the past-due homeowner. He'd try to arrange a meeting with them, in the hopes that he could create a three way win.
Since he had seen the bank's filings, he knew how much was owed, and how much was past due. Since he was an appraiser, he could make a great guess as to the value of the house.
So, he would offer the homeowner the opportunity to get out from under the mortgage, sell the house, and have a couple of grand left over.
The past due homeowner got out of a bad situation. The bank didn't need to continue with the legal proceedings. And he now had a house that could be sold at a profit.
Your first step, if you choose to follow this path, would be to check to see if any of this is legal in your area.
Good luck.
Unless you're the lead dog, the view just never changes.
County property and mortgage information is public and availiable to anyone. There is nothing illegal with contacting a homeowner and asking if he wants to sell. Go for it.
Yes Mamn has described your first option.
Right now unless its went to foreclosure , it belongs to the owner . A meeting with that person is the business end right now . Often times that doesnt work because the owner owes too much or hopes to recapture it and wont work with you if the second is true. Sometimes its better for the owner to move it if they can but most have tried through a real estate and the numbers wont go especially with the commision. Then sometimes a realator still has it under contract right up to foreclosure. Knock on the door and find out then check the imformation your self.
Second option is watch it at auction. Who ever owns it may auction it and you need to know who does own it . I call them preliminary auctions where the deed is recorded under the lenders name , but you can pay off interrest and morgage as it will be set in at that but most of the time its a little higher . Then after say a bank has it back they put it up for sale . You hit them before they list it with a realator. Then after its listed and if for some reason the reality cant move it then its accesssible to offers for the bank to take a loss. All that could take 2 years to get that far.
So right now is preforeclosure time hopefully.
Tim
Do your due diligence. You should know as much about the place as you can before you get in the chain of title. Environmental remediation required? Crackhouse? Other lienholders? Work required which will trigger code update requirements?
Sometimes it is better to let it go through the foreclosure auction and bid at it then to wipe the junior encumbrancers off the boards.
This has become a very popular way to acquire rental houses in some areas, and what used to be sleepy sheriff's or title company auctions have become quite lively, and there are few bargains. Depends on your area.
--Ken
Thanks for the info. Fortunatly in our county, the registry of deeds filings are available on-line. Each morning I check to see if there are any updates to this property.
I have checked out the property and it is in need of serious work (which I am prepared to do). I would rather not deal with the homeower(s) as they have issues that I would rather not deal with.
The foreclosure meeting notice(s) filed with the registry list the old mortgage company and a new mortgage company (presumably one that specializes in foreclosures). I have a letter into their "property inquiry" department.
So, once X amount of time passes, the bank removes the present owners and the house goes to auction?? I assume any auction notices must be filed with the registry of deeds??
Thanks again
So, once X amount of time passes, the bank removes the present owners and the house goes to auction?? I assume any auction notices must be filed with the registry of deeds??
Pretty close . Say if a lending instution repos it they will have to do it that is also public which gives the owner a chance to redeem it at last chance but its also up for public bidding. As I said before they are interrested in recovering all expenses. I caution you that often times the final price may be cheaper at a later date if the property can not be sold retail. At any rate the property has to go through a public sale to release title completely. Also you are completely paying the property out at this point.
The first thing you need to know right now is what is against it . Seems to me you are wasting some time not knowing because if you did you might walk becuse the property wont sell in bad shape for a top loan value retail. In other words the fix up may not be figgured at this point. Let us say that these people got a 90 percent loan or worse. <G> Ok , you cannot pay 90 percent of top value which might be the case . On a 30 year note as you know the first 10 years doesnt mess much with priciple, so the out standing value would nearly be the same . Now tack on property taxes that were not paid and penalties and youre up to 100 percent of top value which happens. Find out quickly what is owed against it .
Tim
Around here, banks are not filing with the recorders office when they take possession of a house. This is so that the city code enforcement officers cannot find the owner and make them clean up the yard.Makes it difficult to find the true owner to negotiate with.
Fortunately, the registry has the original deed filed (=what they paid for the home) as well as the original mortgage amount from 2004. The registry also shows a tax lien. I have estimated the original note plus tax issues plus penalties plus repairs (nearing a full gut) plus profit to be well below market value. So if I could get it for what the bank has into it, I would be happy. Hopefully the present bank will forward additional details.
Tharrett:
You need to reevaluate your aversion to dealing with the present owners. They are the most likely to be able to provide you with a clear title. Foreclosure WILL NOT erase an IRS tax lein. So great, you pick up the property for pennies on the dollar at a foreclosure auction, only to find out that no one will buy it from you until you pay off the former owner's income tax bill. Ouch.
Another potential problem is, in some states, foreclosed owners have six months or so to repay the foreclosure and recover their property. Again, you pick it up for pennies on the dollar, pump in several grand in labor and material, the previous owner comes along and says "Thanks for fixing up my house, now get out." And you get out.
If the present homeowner can convince his bankrupty judge that he had equity in the house at foreclosure, he may get it back.
Read "The Smart Money Guide to Bargain Homes" by James I Wiedemer and I'm sure you'll agree that buying at foreclosure is an economic minefield for beginners.
don't know if this has been mentioned or not but it's not uncommon nowdays to see "back child support" liens on homes in foreclosure.
Never heard of it .
Only what applies to that property.
Tim
Depends on your state. you would be surprised at what can get sold out from under you for back child support.
My first wives Second husband ( Yeah, I know that sounds like something you would hear on a Springer episode) lost his house and car for back child support. You have to owe a ton of money but some of these guys are $70-80K in debt for child support.
Guess I should add, it was a row home in the city and owned free and clear. Not sure how it would work if there was a mortgage.
Edited 11/27/2005 10:16 pm ET by robert
They dont seem to take it that far here and I havent been able to find out why. Theres a bunch of men that should be in jail over no child support payments .
Tim
Edited 11/27/2005 11:00 pm by Mooney
"My first wives "How many FIRST WIVES did you have. Must have been at the saem time for them to be FIRST WIVES.
All I know is that young wifes are fun .
And older ones are wiser.
Tim
Edited 11/28/2005 5:54 am by Mooney
Hey,
It was 10:15 PM and I had just spent all day with my own three kids. It's a miracle I could type at all let alone spell. Only one first WIFE (IS that better?) But based on the porn star quality 24 year old who moved in next door I might start working on " Second Wives" .