Picking up foreclosures....?

Question

I've heard of people picking up on house foreclosures and getting great deals.... How do they do that?

Answer 1

There's a ton of late night TV ads promoting real estate and how people can pick up a house for $12,000 and then spend $5K to fix it up and then 'flip' it for $125,000....or those that have a "paper" net worth of 1/2 million due to their investments in real estate. Remember, they are selling you their video tapes and books for $19.95 with $29.95 shipping.

In the real world, banks handle non-paying mortgage borrowers either through judicial or non-judicial foreclosure. If they foreclose (say) at the courthouse steps, then you COULD go and bid for it during this process. However, chances that you would be the winning bidder, (over the bank's bid), would be slim in my opinion, i.e. you would have to have funds lined up, your bid would probably have to be ~75-80% of the appraisal which you would not know, etc. The simpler way is to talk to banks, Fannie Mae (Federal National Mortgage Association) and obtain lists of foreclosures in your target areas. Then you can access web sites like Realtor dot com to see what the market is for similar properties. Bottom line - it ain't easy to do - there is a lot of leg work plus usually a lot of 'home makeover' to get the property back to marketable / curb appeal and get your buyer. If you have a full time job and plan to do this 'on the side' better think again....you'll either need help (which costs money) or before or after work time + weekends. It CAN be done, but it is by no means "easy money". Good Luck.

Reference: http://www.fanniemae.com/index.jhtml

Answer 2

It's best to call a realtor. They have websited you can join, but the details are usually sketchy & they charge for more info or they sell your info.
Realtors can set you up on a distribution list so you receive updates on foreclosures, short sales and HUD homes based on the criteria you give, that way you're not sorting through listings you're not interested in.
They can also tell you what's a good deal and what's not - because they're not ALL steals. In fact, many times houses that sell in auctions go for more money than the market value. You should also be prepared for long wait times on bank-owned housing - they want to get the best deal possible, so they may wait months before accepting your offer. A real estate agent deals with these situations all the time and can tell you how to make an offer that's likely to get their attention.
My realtor has been unbelievably helpful in this process. You can go to homegain.com to search for realtors - it lists a lot of info about them that can help weed out the good ones from the bad ones.
Still, always get an inspection - you never know what you're going to get without one!

Answer 3

You probably know which area you want to purchase in already. The best way to do this is to go to the source. Go into the banks in the neighborhood that you are interested in and ask for their foreclosure lists. The banks want these properties off their books in the worst way. It really screws up their cash flow and they will go out of their way to help you purchase one of their foreclosures. In many instances they will come up with special loan packages just to help you out. Its a Win Win situation. The bank clears its books and you get a good home at a good price. Why talk to agents and middle men when you can go right to the source and do it yourself. Good luck.

Answer 4

We invest in real estate. We go through an agent who specializes in REO. Generally we pay cash so the bank will short the sale (let us purchase under the value of the defaulted mort.) but it is not required. The best advice I can give you is to find an agent who is familiar with REO in your area . . . make sure the transaction is at arm's length (intermediary). And inspect, inspect, inspect . . . Generally speaking I disqualify about three to four homes based on inspection alone . . . Inspections in Florida (including termite) generally run about 400.00 . . . so expect to pay upwards of 1000.00 for inspections alone (you will be so glad you did so). I'm not sure how it works in your state but I generally work out a flat fee for commission with the realtor - generally speaking about 5000.00 per 100,000.00 plus a fee based on the money I knock off on the short sale. For instance, if a bank is asking 200k for a house and I get for 120k on short I usually pay an additional 2 - 3% for the difference. Believe me, a good agent is worth every penny . . .

Answer 5

The buy Hud homes. Google Hud. They are not always good deals. Some of the properties are in deplorable condition and they are being sold for what they are worth. Look closely.

Answer 6

There are designated professional lists which truthfully seek you for the correct sort of listings and mean you can understand on forecoming auctions as good as listings of the to be had homes. on this global know-how is the important thing, on what's to be had wherein, i've made relatively a well quantity via those varieties of auctions and revenue

Answer 7

It's not as easy as some make it out to be and it isn't what is shown on TV. Here is a article I received maybe it will help you:

Jim Buchta, Star Tribune

No one needs to remind Danelle Hoeppner that the number of mortgage defaults is skyrocketing. Almost two months ago, she and her fiancé, Brad Cheney, made an offer on a Bloomington house that was in default, but they have yet to get a response from a California lender that holds the mortgage.

"With all the houses on the market, don't you think they'd want your money?" Hoeppner said. "I guess that's not how it works."

If you believe the infomercials promising instant wealth from distress sales, then the record number of foreclosures should mean easy pickings for investors. But real estate agents and prospective buyers say that offers on many bank-owned houses go unanswered for weeks and! that closings are sometimes abruptly canceled.

Sales agents blame the delays on a growing backlog of listings and on ill-prepared mortgage companies that might be hundreds of miles away and grossly understaffed. Some experts say that buyers themselves are contributing to the problem by making unrealistic offers in hopes of snagging a bargain.

"It's unbelievable, and I'm hearing this from every agent I talk to," said Jay Anderson, of Coldwell Banker Burnet in Minneapolis, who has been waiting six weeks for a response to an offer of his own on a foreclosure home that he plans to hold for investment.

Listings backlog is growing

Experts say that buying a bank-owned property shouldn't take longer than a traditional transaction and that most come off without a hitch, but real estate agents say some buyers are facing increasingly frustrating delays as mortgage delinquencies rise.

Earlier this month, a Minnesota study based on sh! eriff's sales said there were 11,207 foreclosures statewide in! 2006, a nd a record pace has continued through 2007. In July alone there were 975 foreclosures in the 13-county Twin Cities metro area, up from 392 a year earlier, according to RealtyTrac.

The sluggish housing market is doing little to help those who are unsuccessfully trying to sell their houses before the situation comes to a final sheriff's sale. These houses often become "short-sale" listings, in which the owner has made arrangements with the lender to sell the property for less than is owed so that it won't go back to the lender.

Those transactions can be more complicated, in part, because the sale terms must be approved by the lenders. Additionally, those lenders often are in offices far away where loss-mitigation departments are struggling to process the listings and to prevent other homeowners from meeting the same fate.

Richard Bauer, the agent representing the anxious sellers of the house that Hoeppner and Cheney are trying to buy, said that, acr! oss the country, lenders are struggling to adapt to changing market conditions.

Bauer said that he has received four offers on the Bloomington house, but that none of the other buyers was willing to wait for the lender to process the offer, leaving the sellers closer to foreclosure.

"You hear that and it doesn't sound logical," said Bauer, an agent with Edna Real Estate in Minneapolis. "But you ask: 'Is this whole mess logical?'"

An expert's view

Danielle Babb, a California-based real estate investor and author, said inquiries about bank-owned listings have increased 400 percent nationwide, but because a typical lender can process only 10 to 12 a day, the levels are becoming unmanageable.

Babb said most major lenders and brokers are well-equipped to handle the barrage and have large staffs that can be reallocated from one task to the next. But many small- and medium-size companies that are new to the mortgage industry just! aren't nimble enough to process these transactions quickly en! ough, sh e said.

"And with layoffs [happening within the industry], banks are even more understaffed, so they're not ramping up yet," said Babb, who recently coauthored "Finding Foreclosures."

Dan Arrigoni, president and CEO of Twin Cities-based U.S. Bank Home Mortgage, said his company doesn't have a backlog of listings, in part because it didn't offer the riskier sub-prime and Alt-A mortgages that are much more likely to default.

The company, which works with a national real estate service and local sales agents, now has just under 120 properties, and the average market time for them is about four months.

"The Realtors want to sell them as bad as we do," Arrigoni said.

But he acknowledges that many mortgage companies are preoccupied with staying in business. "These companies are struggling to survive and to fund loans," he said.

Patrick Carey, senior vice president of default and retention operations for Wells Fargo Home Mortga! ge, said that while the number of listings his company owns has increased, the firm has ramped up staffing and training to meet demand.

Carey said his department is trying to process its houses quickly in large part to avoid negatively affecting the community.

Foreclosed houses can be a drag on property values if they fall into disrepair or if they are sold at fire-sale prices.

"We don't want to deteriorate values in a given neighborhood," he said. "Investors need to get market price for that property."

From both sides

Byron Anfinson of Coldwell Banker Burnet said he has seen the situation from both sides. He has had buyers who were essentially left homeless because of problems with title work that delayed a closing, but he also has received a response from some lenders in as few as 15 minutes.

Lenders blame consumers for some of the delays, either because of ridiculously low offers or because of incomplete pape! rwork submitted by the buyers.

Jim Miley, president o! f reside ntial real estate for Bremer Bank in Minneapolis, said many lenders are losing big bucks on their listings because they financed them at the peak of the market or extended credit beyond the value of the property.

"We've had some very zealous lending going on," he said.

Some even speculate that lenders aren't eager to sell their listings because they're waiting for the market to improve or the market has changed since they priced the listing.

Patrick and Briana Schiebout wondered if such a situation happened when they bought their split-entry house in Rosemount. The first-time buyers saw it, loved it and made a full-price offer in an effort to clinch the deal.

It took the bank seven weeks to respond, and then it countered with an offer slightly higher than the original list price.

The couple, who saw a foreclosure as a great opportunity to finally get into the market, were willing to pay the higher price because they just didn'! t have the energy to go through the process all over again.

"We threw our hands up in the air," Patrick said. "We didn't want to wait another seven or eight weeks, so we accepted."