Foreclosures for living - not flipping?

Question

I want to buy a foreclosure, to live in, not "flip". Otherwise, regular prices are too high... but it looks like the only people who buy foreclosures are for quick profits. Is there a reason for that difference? Or am I correct to consider foreclosures to find a home to live in?

All of your answers are very helpful, any more are very welcome. Thanks again.

Answer 1

My husband and I bought a foreclosed home to live in last winter.

We looked at the house before we made an offer, and knew that it was going to take a lot of work to make it nice. We also knew that if our offer was accepted we would be stealing the house. We stole the house.

Our Realtor showed it to us, right along with other properties in the area.

8 months later we are still renovating (doing the work ourselves). We have fixed a roof, installed gutters, done mold remediation, ripped floor coverings, gutted a kitchen, stained cabinets, installed a kitchen, installed new floor coverings, painted, gutted a bathroom, done some plumbing, installed a bathroom, and are in the process of adding a second bathroom.

With the $$$ we have spent (around $30k) on the renovations plus what we spent on the house we have still spent less than half of current market value for homes in this area.

We knew what we were getting into with this house before we bought it. We looked at others that needed less work, but we liked the location this one was in.

If you find the right house, buy it.

Answer 2

I have read some of the information you have gotten here, I just don't know what to say.

This is an excellent way to find a home to purchase for yourself and family if you have one.

I don't suppose anyone has heard of pre-foreclosure or purchasing the house before it get to the sale stage.

Let's take the foreclosure sale first. The auctioneer will insure that you have all cash or a cashier's check to cover the entire cost of the property both first mortgage and the second mortgage even if the second mortagage is doing the foreclosure. The second mortgage is required to maintiain the first mortgage even if it is current.

Now if you know that a person is in foreclosure this is called the pre-sell, and the nightly gurus indicate this is the best period in which to find the best deals in the foreclosure field. So do I.

Find a way to get a list of properties that are presently in foreclosure, you can purchase such a list from a foreclosure list broker, you can also research for foreclosures at the county court house of the county in which you reside, you can adveretise in your local paper that you purchase foreclosures.

Once you have contacted someone or someone has contacted you that are in foreclosure, you have to make an appointment to see the owner and the property. Go through the entire property make a list of what you see as items that are wrong with the property. All house ar not destroyed or junked by the owners.

Get all the information about the foreclosue you can about why the person is in foreclosure, how much he paid for the house, when he purchased the house, the value of the house, how much he presently owes, the monthly payments, the number of liens he has on the property, when he last refinanced the property, if the property taxes are current, how much he wants in his hand to sell the house to you. Pick up his mortage book, insurance policy, tax statement, get any other information you think is important.

Now take the information back to your home, find a way to find out the going prices of properites in the area. Compare the prices.

After all is said and done if you think the house is a good deal go for it make the owner an offer. Now take out of his proceeds the taxes he should have paid while living there, this is his expense.

Take in consideration the total amount owed on the house, the value of the house, how much the owner has indicated he wants (You may still negotiate this) how much it would cost to do the repairs you found out about the property. You might want to make another trip if you are not sure of the needed repairs.

I hope this has been of some use to you, good luck.

"FIGHT ON"

Answer 3

It largely depends on each case. Generally, the bank initiating the foreclosure will bid at the sheriff's sale to ensure they are paid in full from the sale, so you may not be getting much of a deal unless the previous owner had quite a bit of equity in the home. Once a sale is confirmed by the court, all other liens are extinguished, so you do receive clear title. However, if a second mortgage holder is foreclosing and the first is current, the sale can be "subject to" the first mortgage, meaning you'll have to pay the amount for which you bid at the sale (which makes it seem as if you're purchasing the property very cheap), but the first mortgage remains attached to the property and you are responsible for paying it, which can make it not such a good deal.

Foreclosure happens to good people as well as bad, generally because of a lost job or medical bills. It doesn't mean the property will be trashed for they'll come back demanding you leave. Keep in mind, though, that you can't see the interior of the property until after the court confirms the sale, so it's very much buyer beware. Good luck!

Answer 4

The thing you have going for you is the price. You don't always get to see the inside of a house before hand. So you allow yourself room in your bid to cover for things that may be needed. And looking at the out side condition can give you a good idea as to how the property was cared for. It goes with out saying the you should pay much less than what other homes are selling for in the area.
A big plus is if you can do many of the needed tasks yourself.
There are lots of problems & you should take then all in to consideration. The reason most regular buyers don't buy & fixer uppers do is regular people don't want to go through the trouble buying a fixer upper. If you are going to live in it & do much of the work yourself you can bid a little more for the property than a flipper. Just don't bid to much and allow that if it could go wrong that it will. You should look in an area where the house can be gotten & fixed up for no more than what a regular home in the area can be had for. A flipper wants that much and profit also.
If you plan to do a lot of fixing up or up dating then the worst it is the less you bid & the more room to improve. If kitchen & baths are bad it's not a big loss to tear them out.

If most areas of the house can be lived in while you remodel you don't need as much money upfront.

It is amazing how much soap & water & some paint can improve an area.

Answer 5

I'd ignore those other posts if I were you. Who cares that the other person doesn't want to live in a floreclosure home. That's no answer.
The other person stated issues of former owners coming back to cause trouble. While that is possible(Slim I'm sure), it's probably not something that should scare you away.
Foreclosures can be very profitable but you need to be careful of any second mortgages, leins, or judgements that are on the property. Foreclosures are usually held on the court house steps(literally), and you better have done your homework so you dont get burned. I'd suggest studying up and going to a foreclosure sale or several so you see what it's like first. I could write you a small book on all of that. Fortunately the book stores are full of foreclosure books already. To find a property in foreclosure you can go to sites like http://www.cwrc.com/.

Hope that helps

Answer 6

I bought a foreclosure several years ago. I was able to see the inside of the house while it was up for bidding to see what kind of damage had been left behind. There should be some type of property condition report you can have before bidding-ask your realtor about it. This will give you a better understanding of what major work needs to be done and what things need to be fixed/replaced.
Foreclosures happen to all sorts of people, not always the destructive kind. I found out (from neighbors) that a family member became very ill and medical bills were extensive...so the owners had to foreclose.
With some minor renovations, the house had become mine and it has doubled it's value than what I originally paid for it.
Good luck!

Answer 7

There are three problems with buying a foreclosured property. One is that it is usually in bad condition as the previous owner did not have an incentive to work on it, and may even vandalize it (plumbing, windows) as revenge on the mortgagor. Another problem is that most states have a redemption period that allows the previous home owner to claim the property back if they can come up with the full amount owed (included legal fees paid by the mortgagor). The redemption period starts on the day of the foreclosure sale and can last anywhere from one week to several months, depending on the state. The third problem is you may have to pay for legal proceedings to evict the former owners.

Answer 8

If you are limited on spending a foreclosure makes perfect sense. You may have to put some work into it, but it my be worth it to you. Some financing companies have special loans for these rehab homes, inquire about them.

I have a girlfriend that bought one specifically to fix up to live in. She got a good deal and her dad did the carpentry work.

Know any carpenters?

Best wishes and keep your head up. Do what makes you happy and what you think is best for you.

Answer 9

If you buy a home at an auction (foreclosures) you don't have any guarantees. It is also harder to get financing for a home that the bank had to sell

Answer 10

I wouldn't want to live in a house that was foreclosed upon. The previous owners may show up and try to start trouble.