All you House Buyers

[boarder42]

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.

[James]

Buying a foreclosed house is a whole different animal than just "buying a house" in the usual sense. There are a whole bunch of possible savings and possible pitfalls, with an emphasis on the pitfalls.


I have looked into the same idea in the past, and right now there is a foreclosure a couple houses down from me. Like your realtor said, you have to do all the leg work to figure everything out. Start talking to the people who live there, the bank, and keep going from there. It can be a long process, and don't count on things "making sense" regarding what the current homeowners are doing or what the bank is doing. I'm sure someone else with more experience will comment, but each foreclosure is different and every bank can be different with what they do with foreclosures and what possibilities might be available.

[boarder42]

The house i'm currently in was a foreclosure but listed on MLS.  So it was an easy process.  Gonna call the bank this morning and see what i can get from them.  Would like to buy it from them no agents involved so they can save listing fees etc. if possible.  Thanks for the tips keep them coming would love more info, As this would upgrade my house immensely but somehow lower my taxes and give me a bigger house in a better location of the same community i live in now. AND increase my Equity at no real cost on my part. LOTS OF POSITIVES.

[Thegoblinchief]

The house i'm currently in was a foreclosure but listed on MLS.  So it was an easy process.  Gonna call the bank this morning and see what i can get from them.  Would like to buy it from them no agents involved so they can save listing fees etc. if possible.  Thanks for the tips keep them coming would love more info, As this would upgrade my house immensely but somehow lower my taxes and give me a bigger house in a better location of the same community i live in now. AND increase my Equity at no real cost on my part. LOTS OF POSITIVES.

A lot of banks have a separate page where they advertise bank-owned properties. Hope it works out for you, if it is as ideal as you think it right now (not knowing any details about interior condition).

If it's a giant bank, half the challenge would just be getting to the right department/person.

[boarder42]

yeah its HSBC i just called them and got sent to a voicemail going to call back in and try to get a human

[YTProphet]

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.

[boarder42]

oh wow.  All good information.  The house is worth more than the bank purchase price from zillow IMO. i could be off i havent seen the inside.  I may go by and see if i can talk to the homeowners today.  maybe i can setup a short sale.

[YTProphet]

oh wow.  All good information.  The house is worth more than the bank purchase price from zillow IMO. i could be off i havent seen the inside.  I may go by and see if i can talk to the homeowners today.  maybe i can setup a short sale.

At this point, it's not really worth the bank's time to do a short sale since they've already spent time and money on the foreclosure process. By the time the short sale is arranged, the redemption period will almost be over and the bank could just put it on the market. I doubt they'll cooperate.

I would be very wary of buying redemption rights. Homeowners, even homeowners whose home has been foreclosed and is in the redemption phase, have many rights under state and federal law. It can be a huge pain in the butt to get them out of the house and it's not a simple process. You will definitely have to hire a knowledge real estate attorney if you plan on engaging in that process.

[boarder42]

I guess i'll just wait til it hits the market in a year??? that seems dumb seems like the bank would want to cooperate with someone who wants to buy it now.

[YTProphet]

I guess i'll just wait til it hits the market in a year??? that seems dumb seems like the bank would want to cooperate with someone who wants to buy it now.

The bank can't sell it to you now. The homeowner still owns it until the redemption period is over. The homeowner could theoretically sell it to you assuming you pay the redemption amount, but, like I said, that can be sticky. And in order to do a short sale, the homeowner needs the banks approval to sell the house for less than it's worth because the bank is eating the difference.

Think of this from the bank's perspective - You're Wells Fargo and you have 50,000 properties that you're currently foreclosing on. You have a process in place to foreclose on homes, take them back, sell them, and minimize the amount of money you lose in the process. Why interrupt that process for one house in a random city? Wells Fargo doesn't  care about getting their money back a few months early if it means interrupting their process. That interruption is likely to cost them more money and put them at more legal risk than just following the process they have in place. A few thousand $$ and a couple months is nothing to them. It's just an annoying interruption of their process.

[boarder42]

awesome insight i'll just wait.

[boarder42]

So some updated For those interested.  I live in a county that keeps all records online.  I was able to locate the bank that owned it now through these records. HSBC.  I contacted  local guy that buys repos as an investment.  He said big banks like this have local agents they work with, But jackson county has 90 day sheriff evictions from the date of the auction and most Foreclosures go to market 3-4 months after the auction.  He recommended i contact some of the local agents on HSBC's site selling foreclosures.

I Found out that HSBC no longer works with local agents and uses an online portal.  So since the house was bought at auction Jan 7. it should be listed in the next couple months. 

[arebelspy]

I'd be trying to get it before it's listed, personally.  It'll take more work, but will guarantee you the property, and hopefully a discount.

[AlexK]

I guess i'll just wait til it hits the market in a year??? that seems dumb seems like the bank would want to cooperate with someone who wants to buy it now.

Yeah you would think banks would act rationally in their own best interests but they often don't. My friend offered a bank $85k for a house that was bank owned. They turned it down. It went on the MLS a few months later, he offered $65k on the first day and they accepted. I've heard lots of stories like that.

There are houses in my neighborhood that have been bank owned and vacant for 5 years, accumulating HOA and taxes the whole time (somebody's paying the taxes obviously)! How is that in anyone's best interest? The HOA foreclosed on a bunch of them recently and sold them dirt cheap (I almost got one for $34k but was slightly outbid in a sealed auction). In my state the HOA lein extinguishes the bank mortgage lein so the bank gets nothing. Not too smart, all the bank had to do was pay the HOA fees.

[boarder42]

I'd be trying to get it before it's listed, personally.  It'll take more work, but will guarantee you the property, and hopefully a discount.

I'm open to any tricks you have but the bank is a closed book everyone I talk to refers to the 2 sites it may be listed on.  I guess I could go talk to the people. How do you even start that conversation?

[arebelspy]

I'd be trying to get it before it's listed, personally.  It'll take more work, but will guarantee you the property, and hopefully a discount.

I'm open to any tricks you have but the bank is a closed book everyone I talk to refers to the 2 sites it may be listed on.  I guess I could go talk to the people. How do you even start that conversation?

You need to get to the asset manager.  It's not something easy to do, but with some persistence you'll get routed to the right person. Just tell them what you're interested in and why and how it benefits them.

[boarder42]

I'd be trying to get it before it's listed, personally.  It'll take more work, but will guarantee you the property, and hopefully a discount.

I'm open to any tricks you have but the bank is a closed book everyone I talk to refers to the 2 sites it may be listed on.  I guess I could go talk to the people. How do you even start that conversation?

alright so i just keep calling the bank trying to get a real person ... then once acheived i try to get to the asset manager? This is HSBC bank dont know if that matters but i'll try.

You need to get to the asset manager.  It's not something easy to do, but with some persistence you'll get routed to the right person. Just tell them what you're interested in and why and how it benefits them.