The Money Mustache Community
Learning, Sharing, and Teaching => Ask a Mustachian => Topic started by: Shell21 on October 12, 2014, 07:31:01 AM
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As anyone had any experiences buying a foreclosed or preforclosed house? My wife and I are exhausting all options trying to move and just started looking online for forclosures. Is it easier to deal with a bank owned home or a house that is in oreforclosure and how do we even start the process? Is it worth it?
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We have put offers in on two foreclosed homes recently. Biggest takeaway is that the banks have their own procedures that made it seem like we were doing them a favor buying their REO homes.
FYI, one fell through because the bank had whitewashed the property but there's no way it was insurable (home inspector found the issues). But as their contract was adamant they wouldn't renegotiate based on an inspection we just walked. And it's still on the market months later.
The other we were outbid on. Wife found somewhere that the average repo, at least with one of the big lenders/underwriters, the homes typically sell for 92% of asking. YMMV.
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I have bought 4 foreclosures in the past 5 years. Four of them were HUD foreclosures that had made it past the owner occupant phase (30 days) and one bank foreclosure. My advice is to find a good realtor that has experience with foreclosures. They can help you find the good deals when they first hit the market, and they can help you navigate thru the maze of paperwork. It will not cost you a dime...the bank pays their 3% commission.
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As anyone had any experiences buying a foreclosed or preforclosed house? My wife and I are exhausting all options trying to move and just started looking online for forclosures. Is it easier to deal with a bank owned home or a house that is in oreforclosure and how do we even start the process? Is it worth it?
First let's get a few terms cleared up, I think that will help. :)
A foreclosure is a bank owned property (REO).
If it's going through the foreclosure process, there's a few ways you can buy it: 1) Via a traditional sale, if the owners have equity, just aren't paying their mortgage, and are trying to sell before the foreclosure sale; 2) Via short sale, if the owners have it up for sale but don't have equity; or 3) Via the foreclosure auction.
Most people, when they talk about buying a "foreclosure" aren't talking about any of these three. They're talking about buying a house that has already been foreclosed on, and is now an REO (owned by the bank), and will be listed by the bank like a traditional sale on the MLS.
So which are you talking about? REO? Buying at auction? Short sale?
Which is available, and best to do, will depend on what is available in your market.