Author Topic: Long time REO - find diamond in rough  (Read 4156 times)

offroad

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Long time REO - find diamond in rough
« on: February 12, 2014, 03:54:06 AM »
Am interested in understanding and researching long term REO property. Stuff that did not sell at auction and has no resident squatter. And has no problems that would prevent me from parking an RV on the property for ten years while I fix up the house and property and make it livable and useful. So a list of issues and pitfalls?

1) demolition costs are crazy high. Maybe it has pollution or nasty poison materials in it.
2). Crime is real bad in that area. Will try to find rural areas but know that there are crazy people out there who get desperate.
3). Tax liens that will not go away.
4). Property rules-liens-zoning that prevents parking an RV on the property.
5 ). Water-electric-phone utilities that are really messed up or non existent.

Anyone recommend some books on this?  Am going to try and attend an auction or two to get more educated.

arebelspy

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Re: Long time REO - find diamond in rough
« Reply #1 on: February 12, 2014, 08:00:32 AM »
If it's an REO, the bank already owns it.  It went through the foreclosure process.

That means that you should be able to get access to it to inspect.  So 1) is not an issue.  2) Yeah, don't go to that area.  3) Should not be an issue, liens should have been wiped during the foreclosure process, super priority liens aside - either way you'll have a title report done and get title insurance. 4) something you have to research, but that's usually not an issue - potentially much more of one if an HOA is involved 5) again, see #1.

Not sure why you'd attend an auction when you're talking about buying REOs - are you buying at auction, or are you buying REOs?

You say REO, but the way you describe the problems make it sound like you don't have any due diligence, more like an auction, but you say "that didn't sell at auction" but then you say you'll go to an auction.  I'm not sure you're clear on what you're planning, so it's hard to recommend books or further reading.  Please clarify and we can potentially help more.  :)
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offroad

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Re: Long time REO - find diamond in rough
« Reply #2 on: February 12, 2014, 08:47:47 AM »
AREBELSPY - I admit I am not clear about what or how a REO works.  Your comments help me understand it more. 

If a property is a REO, by definition it has gone through auction, and everything should be clear on it.  Because to get to an auction there should be no liens on it. 

1) Would a person not know the early REO properties, if they attend auctions?  Is there always a RESERVE on an auction, for at least the closing costs, and the auction costs, that someone can avoid if the property just goes into REO status?

2) Also a person can inspect it upon demand as it is a REO.  The bank is not going to ask for $1000 to close?  or the town-county will not charge $1000 for taxes?  Can you get a REO, as long as you have income, and just start paying land property taxes on it?

3)  Does REO end up in some town trust property list as abandoned?  Where the town, and not the bank owns it?  or will the bank keep it in some vague hope that the land-only value will increase to a point where it can be sold?
 
   

arebelspy

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Re: Long time REO - find diamond in rough
« Reply #3 on: February 12, 2014, 09:19:18 AM »
Some of your questions are nonsensical, and some are just basic understanding/misunderstanding things.  I mean no offense, as obviously you're just learning, and we were all there once.  :)

I'd suggest you just do some basic reading on the terminology to start to wrap your head around the process.

https://www.google.com/search?q=what+is+an+reo

https://www.google.com/search?q=how+do+foreclosure+auctions+work

Once you have a grasp on the basics, some of your questions will be answered and others will become more clear what you mean, so you will have the terminology to ask them and get an answer that makes sense.  Hope that helps! :)
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offroad

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Re: Long time REO - find diamond in rough
« Reply #4 on: February 12, 2014, 09:28:51 AM »
arebelspy - no problem.  not scared of claiming of nonsensical.  will do more reading.

offroad

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Re: Long time REO - find diamond in rough
« Reply #5 on: February 12, 2014, 09:35:41 AM »
Okay here is a question

REO exchanges and government foreclosure outlets exist.  Where are they listed?  Excahnges are supposedly created as a list to prevent REO "pocket listings" by sales agents. 

arebelspy

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Re: Long time REO - find diamond in rough
« Reply #6 on: February 12, 2014, 10:45:39 AM »
The best way to get REOs is - IMO - through an REO agent (networking with a high volume one).  You want the pocket listings.  ;)
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offroad

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Re: Long time REO - find diamond in rough
« Reply #7 on: February 13, 2014, 06:10:03 AM »
So there are a lot of myths behind REO property. Am getting comments in another forum where people think that the liens are all intact after forclosure and after auction. No wonder that a REO is not getting bought. With that perception no one will buy a REO.

arebelspy

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Re: Long time REO - find diamond in rough
« Reply #8 on: February 13, 2014, 06:30:23 AM »
So there are a lot of myths behind REO property. Am getting comments in another forum where people think that the liens are all intact after forclosure and after auction. No wonder that a REO is not getting bought. With that perception no one will buy a REO.

Some liens may not wipe - a second, can, for example, foreclose.  In some states things like HOAs are super priority liens that don't wipe.  It's all something to research during your due diligence.  And, like I said, you'll want to use a title company and get title insurance.

Also, who says REOs aren't getting bought?  ;)

Also, FWIW, do your own due diligence, don't believe random comments you read on the internet (from that other forum, or here).  :)
We are two former teachers who accumulated a bunch of real estate, retired at 29, spent some time traveling the world full time and are now settled with two kids.
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offroad

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Re: Long time REO - find diamond in rough
« Reply #9 on: February 13, 2014, 07:09:43 AM »
well I understand a Home Owners Association being a super priority lien that can not wipe.  But bad for the HOA if the property can not sell.  That is rare I would assume.

What do you mean a second lien can foreclose?  assume you mena a second lien after the property is sold.

Yes I understand title companies and title insurance.  But a title company can go bankrupt too and leave you with worthless paper.  So you have to know the title company has big pockets.  Also that leaves you with years of litigation to get paid from the title company. 

Seems like a lot more pitfalls to understand.  Not being negative.  Just trying to understand it all.

Goal:  Buy a REO and fix it up, while living there in an RV over five to ten years.  Not a flipper. 

« Last Edit: February 13, 2014, 07:12:01 AM by offroad »

arebelspy

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Re: Long time REO - find diamond in rough
« Reply #10 on: February 13, 2014, 07:17:25 AM »
What do you mean a second lien can foreclose?  assume you mena a second lien after the property is sold.

No, generally (almost 100% of the time, that I can think of), a second lien would be wiped if a first foreclosed.  I'm saying the second can initiate the foreclosure.  The first would stay in place, thus giving a situation where it's an "REO" with a lien.  It's much more rare, but is possible.  It's dangerous at the auction though - make sure you know what lien you're bidding on, because many are the fool who has gone bidding at auction, thinking they're bidding on a first, when it's actually a second, and when they buy it the first is still in place.

Yes I understand title companies and title insurance.  But a title company can go bankrupt too and leave you with worthless paper.  So you have to know the title company has big pockets.  Also that leaves you with years of litigation to get paid from the title company. 

Yes, you absolutely want to use a reputable title company for the rare instance you may utilize the title insurance, but 99%+ of the time you won't.  And I wouldn't worry about the latter part, but that is why you'd use a good (and probably national) title co.

Seems like a lot more pitfalls to understand.  Not being negative.  Just trying to understand it all.

Oh absolutely.  Lots to learn.  It's great. :D
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offroad

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Re: Long time REO - find diamond in rough
« Reply #11 on: February 13, 2014, 07:40:03 AM »
arebelspy - thanks for answering the questions and not getting flippant.  so many people are lacking tollerance for answering questions.  if there was a charma vote you get a 10+ 

arebelspy

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Re: Long time REO - find diamond in rough
« Reply #12 on: February 13, 2014, 08:12:00 AM »
arebelspy - thanks for answering the questions and not getting flippant.  so many people are lacking tollerance for answering questions.  if there was a charma vote you get a 10+

lol, not a problem.  Thanks for the kind words.
We are two former teachers who accumulated a bunch of real estate, retired at 29, spent some time traveling the world full time and are now settled with two kids.
If you want to know more about us, or how we did that, or see lots of pictures, this Business Insider profile tells our story pretty well.
We (rarely) blog at AdventuringAlong.com. Check out our Now page to see what we're up to currently.