So there is a house in my neighborhood i want to live in. Zillow has it listed that it was bought at a foreclosure auction by the bank in January. How do i go about looking into this house and buying it. Its not currently listed on MLS. I talked to my agent she suggested calling the bank first. And also stopping by the house to ask the people living there if i could buy their redemption rights. Not sure what that means.
Any help??? Thanks in advance.
When a homeowner stops paying their mortgage, they're in default under their mortgage and note. Typically, the bank has to then publish a notice saying that the homeowner is in default, that $X is owed on the house, and that there will be an auction on X date. At the auction, the bank is allowed to bid the debt that the homeowner owes them. Any other bidders have to bring cash. At auctions, houses are almost always sold for more than they're worth because (a) the bank bids its debt and (b) if the house is worth more than what the bank is owed, the seller could just sell it, pay off the bank, and keep the difference.
After the auction, a sherriff's deed is given to the bank and the homeowner has a certain period of time (usually 6 months) to "redeem" the property (i.e. the homeowner has 6 months to pay the bank the auction price plus interest and fees). If the homeowner doesn't redeem, then title vests with the bank via the sherriff's deed.
So it's highly unlikely that it'd be a wise move for you to pay the redemption price since the redemption price is almost certainly higher than what the house is actually worth. Now, that's not always the case, so it can't hurt to check.
Even once the redemption period expires, it might take the bank a while to kick the people out of the house, prep it for sale, hire a RE agent, etc. I would bet it goes on the market a year from the date it was auctioned off.