got cash / good credit & want to buy a foreclosed home?

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folks,

this is a step-by-step "how i bought a foreclosed home on the water in the neighborhood i wanted to buy in" that i read on the other forum i participate in that i thought might be of value to prime members. (if others have posted to this level of detail, my apologies- not intending to take anything from what you provided.) thinking outloud a bit, i'm wondering if steveny and others who do this sort of thing for a living might share their thoughts. like most of you, my feeling is there's still more downside to come in properties and i'd like to have my process down pat. (phew - so many words!)

here's the poster's thinking and process:

"I looked for a home in my market. The area I was looking in was primarily based on schools system, Travel Distance, and Boating access to Gulf of Mexico. I wanted Water Front and I wanted something that had a track record against Florida's Hurricanes.(permits and repairs etc)

I started the search in the MLS for foreclosure or REO/Short sales. I googled the area I was looking for.

I also searched Realtytrac Realty Trac is a pay for service and I chose to skip them after they required me to pay a fee.

I kept my mind and options opened and was prepared to compromise if required on square footage, size, style, but NOT on Waterfront or schools.

Once I found a group of foreclosured homes, my search was crosschecked against the MLS and sometimes the homes for foreclosure are not on the MLS but they have a MLS number assigned. (dont ask me why I am not an agent but I suspect it has something to do with time on listing). In my case the house I bought was NOT on a current MLS listing but did have an MLS number on it. I got that MLS from doing a blind search on REO / Foreclosures in the area I was looking and a Realtors web sight came up. This gave me an address.

Once I had an address, I searched the county court records for any documents for deed or mortgage against that property. That is where I learned about the history of the property and based on that analysis I was able to determine WHY the home was foreclosed.

Next, I searched the county for permits against that property. This allowed me to determine risk against the property and what if any damage it sustained during the Hurricane.

Next I checked the property against the FDLE listing for Child Molesters.

Next I checked the school systems for FCAT grades and enrollment demographics. (I have a First Grader)

AFTER this was all done, I checked the county record of recent sales to start to figure out the value.

I then checked the county Tax records. This is where I learned that the Bank owned the home.

I then contacted my realtor. My Realtor had NO idea about this listing. I was surprised at this but was told this is not oncommon in todays market. Banks often do not have a listing agent to push the property. So it sits. Additionally a foreclosure works to your advantage because they Bank just wants to get rid of the property.

I had to use a realtor for a few reasons:
1. I am overseas and I had to do all the research on line
2. Due to a foreclosure, it required a little more diligence on inspections and surveys.
3. I needed someone who could take great pictures.
4. The friend of the court opinion was valued on initial inspection.
5. Needed someone to coordinate my inspections and repairs.

We looked at the time of the foreclosure and months on Market.

In my case the home was listed on the MLS last Summer and steadily was reduced in price each month. Usually around the 2nd week of the month. I guess this is the bank trying to cut inventory and reduce risk.

We made an offer to the bank and the offer was rejected by a lower middle manager. We resubmitted the same offer to that persons supervisor and moved our date of closure up 1 week and it was accepted immediately.

The Home comped Considerably over the appraisal. The Appraisal was completed and I have instant Equity in a great home. I need to do some deferred maintenance and work off my inspection discrepancies, but I purchased a great home, within my budget, on the water, and have taken a foreclosure off the market helping the value in my home on the way.

I would be glad to go in to detail if you wish.
Amazing what you can find out on the web with a little time, and technique!
I got a great rate on a 30 year fixed and should be back in the area in March to do my renovations and get all moved it.

I love this country!

One more suggestion. If you know the county you're going to buy in, go to the County Property Appraisers web page. You can usually do a GIS search of the area and then click on the area you are interested in. Each site has different map functions but they usually hold the same info.

Look for an area that had a high turnover rate in 2006-2007. Most county's list their sales info on the sites and you can visually see the properties on a GIS map overlay. I have found the more homes for sale on the market in a concentrated area, generally the higher the number of flippers caught with their pants down. Once you see the property, look at the tax records for that holding. If you see a corporation or a bank, BINGO you probably have a foreclosed property.

Banks really, really, really want to get rid of em!"

from successfully experienced foreclosure buyers, your comments / suggestions?
 
folks,

Banks really, really, really want to get rid of em!"

from successfully experienced foreclosure buyers, your comments / suggestions?

My instinct is to ask why do they want to get rid of them so bad? Am I smarter than the banks? If so, how? My personal challenge is figuring out what I can honestly expect the house to sell for. I know this sounds fairly "basic" but it's a real issue. Two friends of mine flipped houses much more regularly and I got to hear every word of frustration over the past year. In my area Houston/Austin/Dallas it's extremely difficult to judge property values (austin not as bad). I've noticed a tiny pickup since rates hit about 5% lately though.

There is still a dislocation in many markets between what the desperate seller and patient/cautious buyer are willing to pay, but it starting to narrow. I'm including banks as the desperate sellers in this situation. As long as you are aware of this, the above sounds like a good rough plan for that area at least.

One of those above friends is actually sueing for some of his property taxes back. We have no income tax in TX and the property taxes are substantial. Based on his own professional assessment of his primary home's value, he's overpaying by almost 5 grand a year as the state figures are way off at this point.
 
They want to git rid of them because they are BAD DEALS. Think about this just like the stock market. The "Pro" gets out 1st, then the RE-Retards that got into RE because it was so good get out next and take it in the butt. Next the banks pick up the crap that the Re-Retards forclosed on, After the banks can not do anything with it then it becomes retail. It's like sloppy 5th's with a fat chick, sure you can do it but why would you?
 
They want to git rid of them because they are BAD DEALS. Think about this just like the stock market. The "Pro" gets out 1st, then the RE-Retards that got into RE because it was so good get out next and take it in the butt. Next the banks pick up the crap that the Re-Retards forclosed on, After the banks can not do anything with it then it becomes retail. It's like sloppy 5th's with a fat chick, sure you can do it but why would you?


Retail. lol. love that term.

The answer to the question above is that banks lose a fortune when the property sits empty. Plus their balance sheet and deployed/able capital is tied up in assets that are stagnant. If the bank could be assured that it gets a rental income for a while, it wouldn't be in such a hurry to dispose of the property. But that just doesn't happen much.

No question, if you're going to buy real estate (even your first home, not for speculation, etc.) -- go directly to the distressed lender and bid low. :wink:
 
It was somewhat unclear to me, how are you finding the foreclosed on houses for free? Are you just googling: foreclosures free 33445 or something?
 
Anyone know of a web site that has a formula or spread sheet to plug in numbers for purchase price, expenses, proposed rent, interest rate, type things?

I am looking into purchasing some duplexes, etc.

Thanks in advance.

Doug
 
folks,

this is a step-by-step "how i bought a foreclosed home on the water in the neighborhood i wanted to buy in" that i read on the other forum i participate in that i thought might be of value to prime members. (if others have posted to this level of detail, my apologies- not intending to take anything from what you provided.) thinking outloud a bit, i'm wondering if steveny and others who do this sort of thing for a living might share their thoughts. like most of you, my feeling is there's still more downside to come in properties and i'd like to have my process down pat. (phew - so many words!)

here's the poster's thinking and process:

"I looked for a home in my market. The area I was looking in was primarily based on schools system, Travel Distance, and Boating access to Gulf of Mexico. I wanted Water Front and I wanted something that had a track record against Florida's Hurricanes.(permits and repairs etc)

I started the search in the MLS for foreclosure or REO/Short sales. I googled the area I was looking for.

I also searched Realtytrac Realty Trac is a pay for service and I chose to skip them after they required me to pay a fee.

I kept my mind and options opened and was prepared to compromise if required on square footage, size, style, but NOT on Waterfront or schools.

Once I found a group of foreclosured homes, my search was crosschecked against the MLS and sometimes the homes for foreclosure are not on the MLS but they have a MLS number assigned. (dont ask me why I am not an agent but I suspect it has something to do with time on listing). In my case the house I bought was NOT on a current MLS listing but did have an MLS number on it. I got that MLS from doing a blind search on REO / Foreclosures in the area I was looking and a Realtors web sight came up. This gave me an address.

Once I had an address, I searched the county court records for any documents for deed or mortgage against that property. That is where I learned about the history of the property and based on that analysis I was able to determine WHY the home was foreclosed.

Next, I searched the county for permits against that property. This allowed me to determine risk against the property and what if any damage it sustained during the Hurricane.

Next I checked the property against the FDLE listing for Child Molesters.

Next I checked the school systems for FCAT grades and enrollment demographics. (I have a First Grader)

AFTER this was all done, I checked the county record of recent sales to start to figure out the value.

I then checked the county Tax records. This is where I learned that the Bank owned the home.

I then contacted my realtor. My Realtor had NO idea about this listing. I was surprised at this but was told this is not oncommon in todays market. Banks often do not have a listing agent to push the property. So it sits. Additionally a foreclosure works to your advantage because they Bank just wants to get rid of the property.

I had to use a realtor for a few reasons:
1. I am overseas and I had to do all the research on line
2. Due to a foreclosure, it required a little more diligence on inspections and surveys.
3. I needed someone who could take great pictures.
4. The friend of the court opinion was valued on initial inspection.
5. Needed someone to coordinate my inspections and repairs.

We looked at the time of the foreclosure and months on Market.

In my case the home was listed on the MLS last Summer and steadily was reduced in price each month. Usually around the 2nd week of the month. I guess this is the bank trying to cut inventory and reduce risk.

We made an offer to the bank and the offer was rejected by a lower middle manager. We resubmitted the same offer to that persons supervisor and moved our date of closure up 1 week and it was accepted immediately.

The Home comped Considerably over the appraisal. The Appraisal was completed and I have instant Equity in a great home. I need to do some deferred maintenance and work off my inspection discrepancies, but I purchased a great home, within my budget, on the water, and have taken a foreclosure off the market helping the value in my home on the way.

I would be glad to go in to detail if you wish.
Amazing what you can find out on the web with a little time, and technique!
I got a great rate on a 30 year fixed and should be back in the area in March to do my renovations and get all moved it.

I love this country!

One more suggestion. If you know the county you're going to buy in, go to the County Property Appraisers web page. You can usually do a GIS search of the area and then click on the area you are interested in. Each site has different map functions but they usually hold the same info.

Look for an area that had a high turnover rate in 2006-2007. Most county's list their sales info on the sites and you can visually see the properties on a GIS map overlay. I have found the more homes for sale on the market in a concentrated area, generally the higher the number of flippers caught with their pants down. Once you see the property, look at the tax records for that holding. If you see a corporation or a bank, BINGO you probably have a foreclosed property.

Banks really, really, really want to get rid of em!"

from successfully experienced foreclosure buyers, your comments / suggestions?

Man that seems like a lot of steps to go through to buy a house BUT, if I were going to buy a house for myself to live in I just might go through that many steps, especially if it were in an area that I was unfamiliar with.

With what I am buying, currently nothing to flip and nothing for me to live in, there are a few steps but no where near the plethora of steps this buyer went through. Granted it's important to do your due diligence especially if you are buying water front property because we all know anything on the water is not cheap.

The buyer is right that the banks want to get rid of them. They know another wave of them is coming for the beach and then another wave after that. Each wave being a little bigger and fewer people on the beach after each wave.


kudo's to the guy for getting a house he loves for a price he wanted to pay. I can tell you this for sure there is nothing better then a house you love. I have been in mine for 20+ years and even though I have out grown the size of it I can't bring myself to sell it and move.
 
They want to git rid of them because they are BAD DEALS. Think about this just like the stock market. The "Pro" gets out 1st, then the RE-Retards that got into RE because it was so good get out next and take it in the butt. Next the banks pick up the crap that the Re-Retards forclosed on, After the banks can not do anything with it then it becomes retail. It's like sloppy 5th's with a fat chick, sure you can do it but why would you?

Yep, if I were a bank especially a publicly traded one I would want them off my books too, fast.

The dude doing the fat chick is no different then the seller to the flipper to the end buyer, the end buyer being a sub prime fat chick doer, IV fed JD by the RE agents, appraisers, loan officers, and whoever else was on the fat chick before the end user/buyer. ie. the fat chick has always been there she just looked better when the buyer was drunk.
 
Retail. lol. love that term.

The answer to the question above is that banks lose a fortune when the property sits empty. Plus their balance sheet and deployed/able capital is tied up in assets that are stagnant. If the bank could be assured that it gets a rental income for a while, it wouldn't be in such a hurry to dispose of the property. But that just doesn't happen much.

No question, if you're going to buy real estate (even your first home, not for speculation, etc.) -- go directly to the distressed lender and bid low. :wink:

This may be true now but it sure wasn't even 6 months ago. I tried to buy a triplex from the bank and they wouldn't even talk to me. The price I offered them was higher then the ended up getting recently after 6 months of carry costs. I have been meaning to call the guy back at the bank but the lack of time has prevented it. It's not going to gain me anything but it would be worth the laugh.
 
Yup. Lenders are far more willing to entertain offers on REO property these days. Even Countrywide, known for always countering, is getting on the train.

I've seen homes originally listed at say $550k sell for $360k. I'm looking at one tomorrow that was originally listed at $1.3M, now down to $1M. Guess what the seller owes on that house - $1.5M. I'll bet the agent won't even twitch when I say $800k. Okay, maybe just a small tick or involuntary spasm. :biggrin:
 
I'm looking at buying a house and was thinking about foreclosures. What's the best way of finding foreclosed houses? All the websites require you to pay 40 bucks a month and I don't know which ones are legit. Is a Realtor really the best way?
 
I'm looking at buying a house and was thinking about foreclosures. What's the best way of finding foreclosed houses? All the websites require you to pay 40 bucks a month and I don't know which ones are legit. Is a Realtor really the best way?

Drive around in the winter looking for driveways with no tire tracks. This only works where it snows. Drive around in the summer look for lawns that are not mowed. It's all about being observant while also getting other things done. I can spot a deal out of the corner of my eye while driving by at 80 mph. Most of my RE is located about 35-45 minutes away from where I live. I own a lot of houses along the way as you can imagine. If I drive by a place and don't see any tire tracks in the driveway filled with snow I will be doing research that night on that address. Recently it's gotten even easier with navigation units that allow you to pull up your exact location and store it. As of yesterday I now have mobile internet so it will get even easier.
 
good dialogue on the topic, folks, much appreciated.

steve, you're right about the # of steps the creator of that post used, but since he is actually located in italy on military duty and was buying a house in the u.s., he couldn't physically visit the property himself. (iirc, eventually he had family members / friends visit)

hal
btw, **great idea** about tracks in the snow, dry lawns, etc.
 
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