How do foreclosure homes work. I want to buy my first home and this seems like the way to go, is it?

Question

Are these homes auctioned off or do they go for the price they say?

Answer 1

It depends on where you go to get the home. You probably need to do some homework on real estate in general and then on auctions specifically. You need to spend at least three months studying first before you bid. Then you also need to follow the prices and see what prices are being paid.

Right now, the market is tanking pretty much everywhere. What with the ARM's killing most middle class people who bought too much home. So there are going to be a ton of deals in the next two years. Right now is probably too early in the game to buy. Wait at least until summer next year.

And finally, pick one market and follow it so you know the prices and the historical prices. Find a good title rep to get property info, dont rely on the real estate agent who just wants a commission from auction.

Answer 2

As Chrisusc said, there are going to be alot of foreclosures coming. And for the reason he gave. Too many people used ARM loans to buy more house than they could afford. However, these houses won't be good deals at the courthouse steps - the last step in the foreclosure process. At the courthouse steps, the mortgage company will let the house go to the highest bidder over what is owed. If the ARM that got foreclosed is 2-4 years old, there is no equity in the house, and what's owed is equal to or more than what it's worth.

Once nobody buys it at the steps (a risky proposition anyhow due to possible other liens or clouds on title) the bank owns the house and will list it with a Realtor. There are 3 kinds of loans, so 3 kinds of listings.

FHA loans - Go to the US dept of HUD. Become HUD houses and some can be good deals (I live in one)

VA loans - Go to the Veterans Administration. Become VA foreclosures and again some can be good deals.

Conventional loans - Go to the lender. Become bank owned or REO properties.

All 3 of these get listed in the MLS and require a licensed, registered Realtor to bid.

The best deals I've sold have been to teachers and were HUD houses. They have a few special programs for Teachers, police, firefighters, paramedics, hurricane evacuees.

Find a local Realtor who knows how to bid on these, but who does not exclusively "steer" people to them.

Good luck with your house hunt.

Answer 3

Hmmm. Well, yes, the homes are called pre-foreclosure then they go to an auction. If you don't have a lot of cash or quick financing, I would wait until a home goes back to the bank (doesn't get sold at auction) then purchase it directly from the bank.

Check out this site, it's a big help

http://www.foreclosure.com

Answer 4

It depends on where you live. Some areas have laws that provide a good supply of forclosed homes but the best bet for your money is a TAX forclosed home. Not a MORTGAGE forclosed home. It is true that a tax forclosed home usually goes for anywhere between 1% of what it is worth to 20% (cash at the auction) of what it is worth to pay for back taxes. After you pay the taxes you have a year to wait to claim the property while you give the former owners a chance to regain thier property back. If that year lapses and the owners or the bank has not paid you for that home (plus 7% on top of court fees) then you can finish filing the paperwork to claim the home as yours. More footwork, more upfront cash and a longer waiting period than a mortgage forclosed home BUT the pay off is many times greater. I have seen homes go for $250 in back taxes but was in horrible condition (which you could have sold to an investor and made a small profit, $10,000 maybe) and up to about $8,000 for the average middle class house but with overgrown grass and it needed a good airing out. I have seen some commercial properties like store front commercial spaces go for about $20,000. If it gets re-claimed you get your $8,000 back plus 7% of that.

Mortgage forclosures are usually close to full price (with everybody getting 100% financing) and are filthy. It may be worth $150,000 and it is being sold for $140,000 at a forclosure sale. If you are really fast and really lucky you MIGHT get one for as good a price as the tax sale but they have 20-40 properties at the tax sale. Your odds are better but you have to be more patient.

Answer 5

What so much individuals fail to become aware of is that you'll be able to regularly placed a minimize openning bid at the desk to shop for a residence. You could no longer get it with the minimize quantity, however ti suggests that financial institution that you are interested. They'll then come again with a counter off. You can cross backward and forward a couple of occasions negoitating this fee. It's side of the thrill. And use the wanted updates and upkeep in your potential in negoiating.

Answer 6

There's actually no difference between foreclosure homes and regular homes just that you can get them at a cheaper price but the selection is much narrower than regualr homes.