how do you buy/bid on a foreclosed house?

[cwiert]

Hi. My wife and I are thinking about moving to an upscale town in CT (Glastonbury), so our two young kids can take advantage of the fantastic school system there. Anyway, homes are pretty pricey, but I see on yahoo real estate that there are a lot of forclosures and the listed prices seem very doable for us. I just don't know how to do it. All the sites want you to register (pay money) for lists. And it seems there are a million sites that offer this service. It just seems shady to me. We currently live in a nice home in another town, so there's no urgency to get something new. But if we can upgrade to a better town, we'd like to. So does anyone know the steps to take to buy a house that's been foreclosed on? I'm just skeptical of all these money making websites... I mean, there were foreclosures before the internet, so how did people buy bank owned homes then???
Any help is appreciated.
Thanks.

[Porsche-O-Phile]

As a general rule you show up on the courthouse steps with either cash or a bank check, make your bid and pay on the spot. You own the place with any/all issues, liens, problems, etc. after that so it's up to you to do all the homework, background research, etc. on your own dime and on your own time - well in advance.

YMMV. I've never done it but this is coming from a couple of people who have.

[PorscheGAL]

Most are listed with a realtor for a few months. If they are not purchased during that time then there is an auction. Find a realtor. They can look on the MLS for bank owned homes

[t-tom]

Just call a real estate agent in the area. They can tell you about all the bank owned homes for sale in the area.

[Joe Ricard]

Yup, that's how we bought our 2nd home. (now a rental). Found the realtor, made a bid based on what the bank wanted. We won and then paid. Then gutted the house, knocked out walls, rebuilt cabinets, new floors, new paint, new doors and some electrical.

[Porsche-O-Phile]

Just curious - if you go that route and buy through an agent, is the agent on the hook if you later discover the property has an outstanding lien on it (or some other kind of horror story)?

If not, what's the advantage versus going through the court? Other than earlier pickin's I suppose...

[id10t]

If you've got a few million there is a partially built condo across from Ben Hill Griffin stadium - aka The Swamp - going up for a foreclosure auction...

[t-tom]

Originally Posted by Porsche-O-Phile

Just curious - if you go that route and buy through an agent, is the agent on the hook if you later discover the property has an outstanding lien on it (or some other kind of horror story)?

If not, what's the advantage versus going through the court? Other than earlier pickin's I suppose...

Thats why you still use a title company. They guarantee the title to the property and will be able to tell you before you close on the house if there are any liens aginst it. All of this is public record you can find out what lein is on any house / proprety in your hood if you know where too look.

[Eric Coffey]

Originally Posted by Porsche-O-Phile

As a general rule you show up on the courthouse steps with either cash or a bank check, make your bid and pay on the spot.

Yes and no. Typically, a foreclosed home will be auctioned off via trustee sale, either at the county courthouse or trustee (lawyer's) office. However, unless you have prior knowledge of the property, you are buying sight-unseen (other than a drive-by), and As-Is with no opportunity to inspect the property. Also, most of the properties revert back to the first lien-holder anyway, as the minimum bid is usually what is owed on the 1st (which is typically more than the home is worth, ala foreclosure). However, there are quite a few banks that are allowing/stipulating last-minute "drop-bids" and deals can be had. That said, buying at trustee sales is not for the weak of heart. You will usually need a $10k+ cashiers check for each property you intend to bid on. Then, if you do bid and win, each property will need to be paid in full by end-of-business the following day.

[Eric Coffey]

Originally Posted by PorscheGAL

Most are listed with a realtor for a few months. If they are not purchased during that time then there is an auction.

Just the opposite.

If nobody bids/wins at the trustee auction, the property reverts back to the bank, and they will list it with one of their REO listing agents.

Find a realtor. They can look on the MLS for bank owned homes

Yep.

I'd seek out a buyer's agent with plenty of REO experience. You definitely want someone with your interests in mind, and one who knows how most banks opperate.

[Eric Coffey]

Originally Posted by Porsche-O-Phile

Just curious - if you go that route and buy through an agent, is the agent on the hook if you later discover the property has an outstanding lien on it (or some other kind of horror story)?

t-tom nailed it. Also, a foreclosure *usually* knocks out all subordinate liens. There are always exceptions, so due-diligence and title insurance are key.

If not, what's the advantage versus going through the court? Other than earlier pickin's I suppose...

For the non-investor buyer looking for a primary residence, there are plenty of advantages to NOT going through the trustee sale/auction. The two that first come to mind are the opportunity to do a full inspection and appraisal on the property, and the ability to finance the purchase (as opposed to cash-only at the auctions).

[AirKuhl]

Do you own a home now? Can you afford to keep it and also get a loan for the new one?

Contingency sales are very rare for REO's. Can't say "Here's my offer if and when I sell my current house."

[Eric Coffey]

Originally Posted by AirKuhl

Do you own a home now? Can you afford to keep it and also get a loan for the new one?

Contingency sales are very rare for REO's. Can't say "Here's my offer if and when I sell my current house."

Yep. In my experience, most asset managers won't even look at offers contingent on the sale of an existing property.

[ODDJOB UNO]

"knock knock?" "whos there?" i wanna buy yer crib!

[charlesbahn]

So, suppose you are the subordinate lien holder, but you can, and will force foreclosure, what does the bank holding the mortgage usually do?

[fireant911]

Go to hud.com to see if your particular house in interest is available. We did this back in March and it worked out wonderfully... it is somewhat of a crapshoot/waiting game - but it has the potential of ending up great. Stay away from the 'pay-for' sites. We love our second home - it is like a vacation every weekend for me! You must have money in hand in order to bid. We worked with a realtor... well, 'worked with' is a very loose term as the realtor did nothing other than submit our bid. For this, he made better than $5K but that is just what happens. Life is good!!!

[Zeke]

Originally Posted by charlesbahn

So, suppose you are the subordinate lien holder, but you can, and will force foreclosure, what does the bank holding the mortgage usually do?

You take care of any back taxes and delinquent payments or they will knock you off the ladder.

[fireant911]

Originally Posted by milt

You take care of any back taxes and delinquent payments or they will knock you off the ladder.

I recommend that you do your homework as we did not experience any of this. The only caveat that we dealt with was the first right of redemption. Again, my post is not based on opinion as we have actually done this... and did it sucessfully.

[jorian]

I just bought a foreclosure in Palm Springs. Used a realtor who specializes in a particular area and he did most of the heavy lifting. You need all cash and don't get much opportunity to inspect the property so the deal has to be great in order to offset any potential $$$$ issues. We are renovating the place and didn't care about cosmetic defects.

[Jim Bremner]

I'm trying to find a warehouse to do that with.