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bloggerX
September 28, 2009 1:46 PM
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Has anyone here bought a foreclosed home? I'd be afraid the previous owner would set it on fire or something else dangerous...

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squablow
September 28, 2009 7:35 PM
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@bloggerX: My house was a foreclosure, bought it about 5 years ago. I think the threat of previous owners coming back to damage the house are pretty small, you have to keep in mind that the foreclosure process can take a year or more. That's more than enough time for people to move on.

My neighbor's house got foreclosed on and he lived there for at least a year after he got served papers, not making any payments, I don't think the house got to the market for another 6 months after that. It's not like people are missing a payment on the 1st and getting kicked out onto the streets on the 2nd. People getting foreclosed on have a lot of lead time. If you haven't made a house payment in a year, you know it's coming.

I'm happy with my house, it was really rough but the price was right and I don't mind doing the work. Now really is the time to buy if you have or can get the money.

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KyleOrton
September 28, 2009 5:55 PM
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@bloggerX: Some cool old guy was telling me about a friend who bought one in the 60s. Apparently it was a really cool house with lots of stone and his buddy had it lifted to do foundation work. In the middle of the night, the previous owners pulled out the supports and broke it in half.

Also, apparently the guy didn't have insurance and it was just a total loss.

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thebuffster
September 28, 2009 5:18 PM
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@bloggerX: I bought a foreclosed house in December; I got a great deal and the house had mostly cosmetic issues (new paint) and two minor plumbing issues (needed a new water heater and a fixed leaky pipe).

The previous owner was planning on flipping the house, but never could get the extra money to do it; I heard this from my new neighbors after we moved in.

The downside to my foreclosure was that the bank that owned the house didn't know anything about it, so they didn't have to declare anything when they sold it to me.

But almost 10 months later, I'm pretty happy with this place.

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Vjeszczi
September 28, 2009 3:52 PM
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@bloggerX: We got a good deal on ours, the biggest issues the home had was that the attic needed insulation and we had to replace the back deck. Everything else for the most part has been cosmetic and we have taken care of ourselves.

It is a lot more work when you go to close though, there is a lot less you can use to get out of it if something comes up. For instance, we could get the house inspected, but could not use anything found in the inspection to get out of the contract. This may be specific to where we are though.

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mazzic1083
September 28, 2009 6:05 PM
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@Vjeszczi: My wife and I are signing on a short sale next week but we had the same issue; we can get it inspected and back out but lose the deposit. Also, they won't make any repairs to the house if the inspection showed something bad (luckily it was mostly cosmetic and nothing major).

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kalaratri
September 28, 2009 4:54 PM
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@Vjeszczi: Bought our foreclosure last November. Only problem we've had is getting served papers for court dates for people suing the former owners.

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Saboth
September 28, 2009 2:56 PM
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@bloggerX:

I bought one about 6 years ago. Not sure what happened to the previous owner, I heard he had drug problems. First thing I did was change all the locks of course. I've had no issues, and my neighbors are happy that someone responsible has taken over the house, and I've done a lot of improvements/landscaping.

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jcazz
September 28, 2009 2:29 PM
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@bloggerX: We are in our second foreclosed home. My mother-in-law has bought quite a few (a \"slew\" if you will) as well as my sister and sister-in-law (they're on their 3rd).


If you find one that's clean and doesn't have any major issues, you can get a very good deal. Our first only needed paint & a good scrubbing and it was move-in ready. Our current house even had a brand new HVAC system installed about 2 years ago.

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cabjf
September 28, 2009 2:12 PM
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@bloggerX: The ones who would rather destroy the house than lose it are definitely a minority. My brother bought a house that was being foreclosed a few years back. Most of the previous owners just want that burden off their shoulders by the time the house goes into foreclosure.

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Radi0logy
September 28, 2009 2:02 PM
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@bloggerX: I closed on a foreclosure approx 30 days ago. Was a very good deal and the home is in very good condition. Frankly, I haven't even been a little worried that the previous owners would pull some shenanigans

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Wild Monkey
September 28, 2009 1:52 PM
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@bloggerX: Bought a foreclosed home back in 2007. Never once had a run in with the former owners. I don't really worry about it since the stories my neighbors have told me about them.

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Eyebrows McGee (now with more baby!)
September 28, 2009 1:48 PM
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@bloggerX: Maybe they'd just live in the basement like house trolls and you could drop food down there periodically to keep them satiated and calm.

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rpm773
September 28, 2009 2:00 PM
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After buying one house, I couldn't imagine going this route for all the reasons listed above...particularly if I was a first-time buyer planning to live in it.

Maybe that's a market for some, but not for me.

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Vjeszczi
September 28, 2009 3:55 PM
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@rpm773: This was our first home purchase. Yes there were a lot of headaches, but the amount we saved in doing so made it well worth it. Even in this market our home was appraised recently for more than we paid for it.

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rpm773
September 28, 2009 8:10 PM
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@Vjeszczi: Good to hear. Still, I couldn't do it. All the best, though.

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kalaratri
September 28, 2009 4:55 PM
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@Vjeszczi: Saved well over $150k buying a foreclosure in our area for our first home. Yes, it required a few weeks worth of cosmetic work (to the tune of about $5k) but we didn't mind because we could actually afford a decent house in our area this way.

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mazzic1083
September 28, 2009 6:07 PM
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@kalaratri: Right on, we're doing the same right now on a short sale. Not saving $150k (more like $25k) but still savings is savings.

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Snarkysnake
September 28, 2009 2:02 PM
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Finding foreclosures is actually pretty easy. I am finshing up one that I snagged for my daughter right now. Some tips :

1) Go to emailforeclosures.com. You can search for free. The sites that want to charge you for this information are ripoffs. Put in the criteria that you are looking for and you will get a list in your price range. some have pictures ,many do not. For those that do not...

2) Go to Google Earth and take a virtual tour of the neighborhood. What you see will surprise you in a lot of ways.

3) Lots of foreclosed homes are being handled by the government through real estate agents. Real estate agents that will give you Soviet Union -type service because thay are not going to make much money on the deal. Know this going in and you won't be any more disappointed than you would normally be with your realtor.

4) REALLY IMPORTANT TIP- Lots of foreclosure listings that are government agency foreclosures have a very short window for bidding. (Sometimes just 48 hours) be prepared to MOVE FAST. Have your money in place and your ducks in a row.

5) Lots of vulture investor types are going to be poring over the same listings and looking at the same deals that you are considering. They are looking at the house differently than you are.(I met two investors that bid on the house that I bought when I went to closing) It's a business to them,they will only do what makes sense to rent it out or sell later for a profit.

6) NEVER underestimate what it can cost to re-hab an older home. Lots of wiring and plumbing is not up to modern standards and must be replaced.Leaky roofs don't get better because they have a new owner.Cracked foundations are not D-I-Y kinds of repairs. Have money in your pocket for repairs or don't bid.

7) Not all houses are wrecks. Some people have integrity and leave the place in good shape. They just lost the house for financial reasons. Find those and you could save 50% on a house that just needs paint and TLC.

8) It will take many weeks to get your first time home buyers rebate. If it is a big part of your financial package,don't count on the money coming in instantaneously. It took my daughter 11 weeks to get her rebate. Plan on delays. Its the government,thats all you need to know.

9) Talk to neighbors BEFORE buying the house. They can give you invaluable insight into the former owners and the neighborhood. If you hear gunfire ,duck,. Then run away from the deal after using the realtors body to shield you from the bullet spray.

10) This is the best time that I can remember in my lifetime to be hiring craftsmen. They are desperate for work. Not only can you get the house 50% off, but you can get the repairs 50% off also. Heating , electricians ,plumbers -thy want that phone to ring.

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Munchie
September 29, 2009 5:54 PM
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@Snarkysnake: Great advise thank you. Not sure if this a subsection of your advice or not but also make sure to check for all existing leins and judgements against the house.

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Snarkysnake
September 29, 2009 8:46 PM
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@Munchie:

\"make sure to check for all existing leins and judgements against the house. \"

If you are buying a govenment foreclosure,you will get title insurance. If you are buying a foreclosure for cash from a bank ,walk away from the deal if title insurance is not available.Never ,ever ,no matter how good the deal sounds ,buy a property without title insurance. (Ever)

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lmarconi
September 29, 2009 2:08 AM
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@Snarkysnake: Inspection is so key. I'd also add that if you're looking to buy in an area or county with a major drug problem (or even if you just want to be safe), get one of those tests that detects if the house has been exposed to meth lab chemicals. I've heard a lot of horror stories lately.

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heypal
September 28, 2009 7:37 PM
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@Snarkysnake:
This is really, really helpful. Thank you.

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Sudonum
September 28, 2009 7:14 PM
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@Snarkysnake:
I would add, go to your county sheriff's office. In my Parish (county) they e-mail me a list weekly of all the foreclosures coming up for sale. IA lot of times you'll be bidding against the bank that made the loan, but in many cases they're happy to let it go at sheriffs sale as it's off their books.

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oneandone
September 28, 2009 4:42 PM
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@Snarkysnake: This was much more detailed & useful than what the WSJ posted. Good advice throughout.

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kalaratri
September 28, 2009 4:56 PM
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@oneandone: Also, if there's a basement always, always check it first. With the electricity off, the sump pumps and dehumidifiers don't work and an otherwise awesome house could have an inhabitable basement.

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aka_mich
September 28, 2009 4:36 PM
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@Snarkysnake: Hell, I think we should make this comment into a full fledged article. Going to hit #1 as soon as I post this, thanks man.

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Snarkysnake
September 28, 2009 5:21 PM
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@aka_mich:

*blush* Thanks. I could have gone on a lot longer. Like this bonus one that I will throw in for your nice comment -

11) Try to have the tax assessors office re-assess the place after you buy but before you do repairs. This will allow you to plausibly argue that the place is not worth anywhere near the assessed value (especially if it was reassessed during the boom years of 2005-2008).Time it correctly and it could be 2011 or so before the assessed value catches up with the increased real value that you add with your hard work. Could save hundreds or even thousands in taxes that you can spend on the flowers that you sent to the realtor's survivors from tip number 9.

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philipbarrett
September 28, 2009 3:26 PM
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@Snarkysnake: Wow, a commenter on Consumerist who actually knows what they're talking about. This better not become a pattern.

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Radi0logy
September 28, 2009 2:06 PM
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The real problem with a foreclosure is none of the things listed above (I mean honestly, who buys a house without noticing there's no floor?!?). The real tricky issue is the speed at which foreclosure homes turn over. They generally go under contract in a matter of hours.

If you aren't ready to pull the trigger RIGHT NOW, do not bother shopping for a foreclosure.

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pecan 3.14159265
September 28, 2009 2:24 PM
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@Radi0logy: Right, which is why it's really, extremely important to know exactly what you want, and stick to your guns. There's no wiggle room if you're buying a foreclosed property. You really need to have a concrete idea of what you want, and what you're willing to pay to fix.

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Pibbs
September 28, 2009 2:38 PM
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Its amazing how many foreclosures and short sales out there aren't in a condition close to live-able, and yet the asking price is higher than I've seen some non-foreclosures.

My wife and I are looking for our first home. Thankfully we found one house that only needs a slight amount of work, at a significantly lower cost than everything else on the market in the area we are interested in. Some of the stuff we looked at was horrible (graffiti on the walls/ceilings/floors, destroyed walls, extremely bad mold problems in house not lived in for 10-15 years that was not noted.)

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chiieddy
September 28, 2009 2:59 PM
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Problem with short sales is bank approval. It can take MONTHS and for some people, we don't have that time to find a new property. Foreclosures are also bank approval, so I wonder if purchasing you have as long a waiting period on the offer as in short sales.

Best deal was a house we found that was in trust for an elderly woman who was going into nursing care and her heirs wanted to get rid of the property.

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KyleOrton
September 28, 2009 6:04 PM
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@chiieddy: From what I saw, the REO process is shorter than the short sale process (I bought a short sale).

One point is that the banks do work just like another seller; they would like as much money as possible. So the point about everything being factored in is true for their price, that doesn't mean the price makes sense. If the price + repairs works out, then fine. Otherwise, offer what makes sense to you.

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dbshaw
September 28, 2009 3:45 PM
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I wonder if you could be some kind of hero by buying forclosed homes and then renting them back to the original owners, and turn a small profit? Conceivably if the value of the home dropped enough, the new mortgage payments could be less than the family was paying. Do it enough times and you'd could be well off.

Clearly you'd want to look for previous owners who lost their home not because of financial difficulties but because the mortgage on their subprime loans suddenly skyrocketed beyond their ability to pay.

(Note: Flanders did this for the Simpsons last season)

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Sudonum
September 28, 2009 7:15 PM
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@dbshaw:
I've heard of some investors doing this. Not sure how widespread it is though.

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HookerChemical
September 28, 2009 4:12 PM
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I purchased a bank owned home one year ago. It was in good condition, so I haven't had as much to worry about as some homes do. There are some quirks, but nothing a somebody reasonably handy shouldn't' be able to fix. The previous owners were di-it-yourselfers, so I find something that needs a minor repair each month, but we knew all the major problems going in (roof was old, deck was old).

I found the inspection to be useless. My wife and I were ready to purchase a house before the we bought this one because the inspection made everything seem pretty minor. When my uncle, who builds homes, took a look he told me to run from the house as fast as I could. The inspector would point out minor bits of dry rot that would be easy to fix, but didn't mention that the foundation wasn't reinforced or that there were signs rain flooded one of the rooms regularly.

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Skaperen
September 28, 2009 4:27 PM
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I've even seen the electrical breaker panels I suspect came from foreclosed homes for sale on Craigslist and EBay.

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jfischer
September 28, 2009 4:28 PM
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\"No Sale! No Sale! No Sale!\"
That is what the assembled neighbors would chant when the bank tried to auction off farms in the movies about the last depression. The same strict policy is needed now, to \"shout down the auctioneer\".

To participate in the foreclosure process is to encourage more foreclosures, and one could be buying a property from an entity that does not even hold clear title to the property.

See This Decision By the Kansas Supreme Court which concludes quite rightly that the process of \"bundling\" mortgages into securities and the process of reselling mortgages inherently divided \"The Note and Loan\" from \"The Property Deed\", meaning that, at least in Kansas, nearly all mortgages that were resold by the entity originating the loan cannot be foreclosed, as the entity that tries to foreclose (the mortgage servicing entity) does not have standing to sue, as they cannot produce the note, and cannot claim to represent those who do \"hold the note\". Given that \"the note\" could be split into 100 investors' portfolios, it is likely impossible to find the actual \"holders of the note\".

The Kansas ruling seems to open up nearly any foreclosure for an appeal, based upon the claim that the court was defrauded by the entity that foreclosed on multiple levels, not the least of which being the misrepresentation that the foreclosing entity had any standing to bring suit.

So, buy NON-foreclosed properties, and make those who foreclose suffer somewhat for the suffering the imposed on those who were sold impossible \"trick\" mortgages by fast-talking con artists.

Those who buy foreclosures are vultures, picking at the bones of the victims of the excesses of the banks. The banks expect there to be an unlimited supply of vultures. Don't work for the bank.

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mommiest
September 28, 2009 8:48 PM
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@jfischer: I am not a vulture, I do not work for the bank. I was smart enough to avoid getting into an obvious bubble. I voted for people I thought would oversee our financial system better than was done. I warned anyone who would listen that there would be a decline in prices and that it could happen rapidly and they were generally pretty smug in their responses. The poor guy who lost our current house did so through a refinance, but he did get about a half million out of the property, and what he or his family did with that money was neither my choice nor my fault. The guy who lost the house next to us actually worked for a bank, in finance, and hoped to make a quick buck. He should have know better. The new owner is a single mother with a toddler. She actually needs that house more than the banker dude did, based on my conversations with the banker dude.

Don't paint with such a broad, incorrect brush.

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kalaratri
September 28, 2009 4:58 PM
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@jfischer: Considering we have received several warrants for the former owners from people suing them for huge credit card debts, unpaid cash advances, etc. I really don't have much sympathy for them.

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memphis9
September 28, 2009 5:58 PM
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Yes, good people got hurt out of the housing bubble (maybe those \"huge\" debtors you don't feel sorry for were actually paying medical bills after being dumped by insurance?) ---but that's neither here or there.

Consider: right now, the credit card industry is jacking rates on best customers to cover deadbeats. Along the same lines, I'd rather my kids don't end up facing disproportionate barriers to home ownership because we have some misplaced \"moral\" obligation to prop up insolvent homedebtors and the values of their homes, with government guarantees or re-worked loans or artificially stimulating the market to force home prices to stay well beyond the traditional 2.5 or 3 to 1 ratio over annual income. That's not socialism or even capitalism but a particularly hideous hybrid where those who lobby with the most $$ to start get the biggest handouts to \"help the little guy\". I think we've already done enough for banks and lenders. Tell me how to help the pre-foreclosed without playing into the avarice that will generate the NEXT bubble and I'll listen.

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entitynein
September 28, 2009 4:33 PM
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My wife and I were shopping foreclosures for our first home, but just recently closed on a standard sale house (which somehow ended up being a much better deal than any of the foreclosures we saw and needed no work to move in). In our searching I came across this list of REO bank lists which may come in handy for anyone looking to go that route:

[www.mortgagenewsdaily.com]

Some of the links are out of date, but a lot of them work as a starting point.

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kathyl
September 28, 2009 4:55 PM
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There are other problems that you might not notice in a house that has been sitting empty for a non-trivial amount of time, foreclosed or otherwise, that are just natural side-effects of there being no one there to care for the home.

The home we purchased last year sat empty for many months before we moved into it, and we learned a few things. For one thing, especially in an older house, you will have some plumbing issues. You'll probably have something blocked somewhere due to disuse of the plumbing. We had to have a plumber come out and snake out most of our plumbing lines, including going all the way out to the street to clear all the stuff out of the lines.

Also (and this is going to sound trivial, but it's really not) the yard, if it hasn't been looked after for a long period of time, is going to be a headache and possibly more expensive than you are anticipating to bring it back to being something other than an eyesore. I don't even care about the yard so much (not really a big proponent of babying grass and pouring hours of work into something that just sits in front of your house being greenish, though even I want a tidy-looking yard, which is hard to accomplish with nasty looking, quick growing weeds all over the place) but unless you like the neighbors throwing heavy sighs and rolled eyes your way, you will need to bring your yard back to life. Getting rid of all the weeds that grew unchecked while there was no one in the house tending to the yard will be a chore, and resurrecting the grass and/or adding landscaping plants will have a recognizable impact on your time and pocketbook.

These aren't things that a home inspector will bring up to you, but they will most likely come up if you buy a home that sat empty for awhile, and believe me, you'll notice their impact.

Make sure you consider ALL of the extra work that buying a house that has been empty will need. There is something to be said from buying a house that was occupied for a higher price than a foreclosure or otherwise empty house at a \"bargain\". You'd be surprised how quickly that price difference can be made up with all of the maintenance you have to bring up to date.

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thebuffster
September 28, 2009 5:23 PM
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@kathyl: The yard is a good point here. With my recently-bought foreclosure, my neighbors were so happy to have someone living here (as opposed to the empty house that it was for 2 years before I got here), that they don't care too much how long it takes us to get around to improving the yard.

For the back yard, we got a bunch of redwood bark and spread it out, at least to cover the weeds. The house has a small front yard, and I have plans to cover it with small rocks/gravel as soon as the weather cools down.

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kalaratri
September 28, 2009 5:22 PM
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@kathyl: Our real estate agent told us that even though the inspector told us there was no major improvements/fixes needed we should budget at least $5k the first year for stuff they couldn't catch and that we should invest in a home warranty for at least one year.

In two months, the heating system went, a valve burst in the basement and a faulty pipe leaked through the ceiling. After months of disuse, sometimes things can't handle the stress of being on full time again. Fortunately the first two were covered under the warranty and I fixed the leak myself.

Also to be considered is that 99% of the time if there are any appliances left in the house, you will probably need to replace them immediately.

You also have to consider that the roof, siding and windows probably hadn't been recently replaced. Ours were done in the late 90's so we can hold out for a few years, but regularly maintenance isn't usually done if you're struggling just to pay the bills.

And our yard is atrocious. Luckily the HOA doesn't care that much about the backyward because of the wooden fence, but we got nailed as soon as the weather warmed up for the lawn/landscaping. You will pretty much need to hire a service or even need to rip out the whole lawn and put down sod. We tried for weeks to weed kill and reseed but nothing worked. We also had to take down two dead trees, two dead bushes, rip out the dying cement borders and completely redo the 'walkway'. And that's just the front yard.

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kalaratri
September 28, 2009 5:25 PM
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IMO, if you are not a handy person and can't do most of the work yourself (or you don't LIKE doing DIY stuff), I don't suggest you buy a foreclosure.

We had to paint the whole house and replace all the carpets and floors (which includes trim), not to mention replace the counter tops and cabinets. It cost us about $5k, but if we paid for labor it would have been at least double that.

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zjmuse
September 28, 2009 5:55 PM
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We closed on a foreclosed house in the end of August. We were attempting to close since January 15th, 2009, but without our land attorney running an extensive title search we would have been stuck with a dud. There was problems with title and we wouldn't have been able to sell it again or leverage money against it if they weren't cleared up before closing on it. But we picked it up at 30% of the towns assessed price (wasn't in good shape for that) and at about 15% of what the previous (foreclosed) owner paid during peak market. Stripped most of the house and re-roofed it. Not planning on flipping it but we would make our moneys back if we decided to, even in today's market.

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JGBrock
September 28, 2009 6:12 PM
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The house I currently have was a foreclosure. I will never do it again, but not for any of the reasons that are listed here.


The problem I encountered is that there is no one on the other end of the sale that personally gave a shit if it happened or not. Wasn't their house, so if the closing was delayed another week or month, it was fine with them. It made the closing and all the crapola leading up to it a living nightmare.


Plus, there was no bids on the house for a year prior to us. Amazingly, thre was a bid the very next day! And, through an amazing coincidence, it was a friend of on of the bank officers.

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zjmuse
September 28, 2009 6:32 PM
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@JGBrock: Yeah I felt the same way. We gave our offer in January, they accepted. We found paper work that needed to be corrected before it was handed over. It took them until August to get it done.

Though it was not smooth at all in those 7months, it was extended at each closing by 30 days. I honestly think they were trying to wait us out and relist it higher. It wasn't until the end of July when I started basically spamming them everyday about an update to whats going on that they \"got it all straightened out\" and we closed at the end of August.

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JGBrock
September 28, 2009 7:31 PM
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The day of the actual closing, after my wife had driven cross country with two cranky children and two car sick cats, she arrived at the closing only to be told that some piece of paper had not shown up and she should go away. When would it arrive? There was noooo way of knowing. I was half-way across the country and could not help. No one was going to move in since stuff was lost in transit. (moving company staffed by people not moral enough to work in real estate)But, she wanted to put the cats in the basement with food and water and liter box before leaving for my parent's house (another 2 hours). Request to get the keys for this purpose made to guy already in possession of a check for 30,000 dollars? Denied! My wife was nearing melt down when I asked to speak with this asshole. No dice...if he cared any less, it might have caused him to pass out. I asked to speak with my agent and told her to go outside where this jackass could not hear. THen I told her to give my wife the keys or the deal was off. She agreed and slipped them to her.


We love our house, but, as I said, never ever again

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mommiest
September 28, 2009 8:34 PM
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My husband and I have bought five properties over the course of our marriage. Four were short sales or foreclosures, and the one home that was not was the only one we lost money on. We rented through this last bubble and bought our current house after the crash. It was neglected so badly it may as well have been trashed. However, we love it (and a couple of people in the neighborhood have thanked us for buying it). We are able to make money on these deals primarily because we do so much of the work ourselves, but we did not even attempt this while we had small kids running around. My suggestions: be realistic about your life and current obligations; be ready to learn how to do major repairs; be patient about finding the right property; be ready to close AND ready to walk away (we've had agents try to pressure us in many ways, or try to drag out the deal hoping to get better offers). My guy has found a lot of tools on Craig's List, keeping our costs down. We've also picked up a rental here that turns a modest profit that we hope will provide income into retirement. We hope to pick up another one. For us, thinking long-term, as opposed to flipping properties, is what works.

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dakota0908
September 29, 2009 4:38 PM
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@mommiest: Short sale and Foreclosures are NOT the same. A short sale is for a home that is getting ready to go into foreclosure. The bank will usually knock some $$$$ off the top in order to get the sale and to keep the home from going into foreclosure. The banks are able to make a lot more $$$ off of the short sale than they would off the foreclosures. Plus the two go through two completely different process when it comes time to get the financing and paperwork done. You can usually get into a short sale home quicker than you would be able to get into a foreclosed home.

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DH405
September 28, 2009 9:18 PM
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I bought a foreclosure home here in Oklahoma City. I found the list of them, did some scouting of the ones in my range. Went to the gov't auction they have to go thru and put in some lowball bids. One of them landed a house, and I did the paperwork to take ownership. I got it about 1/3 off of market price. I've since done some repairs and it has turned into a nice little house!

I've been very proud of my decision to buy a foreclosure home. It was an enjoyable experience and it really helped me get a start as a homeowner.

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yosemitemtb
September 28, 2009 9:50 PM
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This article was right on, we looked at a lot of really messed up foreclosures before we found our non-foreclosed house this spring. Cracked slabs, outbuildings four feet deep in empty beer bottles (really, no exaggeration, the guy probably could have made one more payment if he had recycled), ripped out carpet and more. In the end, we didn't want to deal with all that, our new home has taken enough time and money as it is and we got it for about the same price as the two foreclosures that have since sold on our block if you factor in all the extra costs to bring those houses up to snuff.

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allstarecho
September 29, 2009 6:19 AM
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I bought a Fannie Mae foreclosure last September. A year in my \"new\" home and I'm more than happy. It was such a good price, I was able to pay cash for it. Another 10 grand in repairs. Total cost: $66,000 for 1400 square feet, 3 bedrooms, 2 bath, living room, game room, kitchen with marble top bar and counters. All I had to do was put in new wood flooring throughout except kitchen where I put in new ceramic tile, paint inside and out, new roof, 1 new toilet, new carpet in the game room, refrigerator, dishwasher, stove, microwave, new water heater and new A/C coils.

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dakota0908
September 29, 2009 4:32 PM
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I just recently bought a foreclosed home and got a really good deal on it. It's a 3br 2ba brick ranch house that's 2,200sqf, fenced in yard with a two car garage, an out building that is 15' x 30' and an inground swimming pool. I bought the house for $56,000. There were some things wrong with the house of course though. The copper lines for the plumbing were ripped out all the way down to te sewer line. The natural gas furnace didn't work, the electrical was all messed up, etc. I was able to do a 203k loan with my mortgage which allows one to finance repairs up to $35,000 in on top of their mortgage. I ended up having all the windows replaced with energy efficient ones, all the carpet was pulled up and hardwood floors were sanded and refinished, 2 new toilets installed, installed a new gas furnace (ductwork included), a new air conditioning unit, a slight kitchen remodel with all new appliances, installed a tankless water heater with new PEX water lines, new countertops, electrical was redone including a new breaker box, and a new liner for the pool. All in all I have about $85,000 invested in the house. This is between the price of the house and repairs. The house was just recently appraised and the ROI was better than expected. The house next to mine is for sale for $120,000. It's nowhere near the house we have. My house currently appraises for right around $147,000 dollars and some change.


I really had to shop around to find one that we wanted. It worked out great in the end. It only took a 6 weeks to get the repairs done and we couldn't be happier.

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3WulfMoon
September 30, 2009 3:27 PM
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We bought a HUD foreclosure this summer. Not quite as good a deal as dakota got, but it was a good price. The copper wiring from each room to the breaker box (home runs) was cut out. Took a little time with a multimeter, a few junction boxes, and $50 worth of Romex to fix. We've since remodeled and updated the house and did some landscaping, and now we've got our little four bedroom, two bath piece of the American pie!


I echo all of the suggestions from the article and also suggest three tips of my own. 1) Get prequalified so you can have your letter ready to go in with your offer. Foreclosures move fast, so you want to have this step out of the way 2) Set aside a couple thousand to use as a \"good faith\" deposit. Most foreclosures require good faith funds to accompany an offer. The first two are important because quality foreclosures don't last long on the market. We viewed our house the day it was listed and made an offer that afternoon. By the time HUD accepted and we went under contract, there were eight back up offers in place. 3) Get the title insurance. This guarantees that you get a clean title. No zombie liens by the previous owners coming back to haunt you.

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dakota0908
October 1, 2009 8:59 PM
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@3WulfMoon: Mine was a HUD purchase as well. It took over six months to get closed on the house because of all the paperwork.

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3WulfMoon
October 2, 2009 11:43 PM
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@dakota


We went under contract May 17 and closed July 1. it would've been faster, but we got caught in a Catch 22 situation. The septic tank needed to be replaced before the bank would let us close. HUD would not let us do that until we closed. So when I told the bank I was walking, they let us set up a repair escrow.

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