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Buying a foreclosed house
LSF Member
Joined:
06/10/2009
From Blaine and Otter Tail County
Posts: 63
In the really early stages of looking at a foreclosed house. Anyone ever buy one? The local paper usually has listings under the 'legal notices' section.
Just wondering how difficult the process is, how you get a chance to look at the house since the owners may still be present (and possibly not too happy about the situation), how you assume possession, etc.

Posted on: 5/1 10:49:25
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Re: Buying a foreclosed house
Field Staff
Joined:
12/18/2012
From South Minneapolis
Posts: 1897
Do you have a realtor you are going to work with? I'd assume they would be able to set up showings that work with your schedule. We didn't buy a foreclosed house but we saw some when looking and they were all empty.

Posted on: 5/1 11:43:55
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Re: Buying a foreclosed house
LSF Member
Joined:
06/10/2009
From Blaine and Otter Tail County
Posts: 63
No realtor yet. I was looking at purchasing the house before it goes on the open market, but it sounds like that is not recommended due to risk.

Posted on: 5/1 12:57:19
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Re: Buying a foreclosed house
Staff Team
Joined:
07/01/2011
From Annandale
Posts: 3759
When I was in the market in 2010 I saw several foreclosed homes, some still furnished and some empty. Some of those empty homes were absolutely destroyed with paint thrown on the flooring, walls, ceilings and appliances either removed or damaged, holes in the walls, etc. Many angry tenants taking out their frustrations on the way out. Ended up attempting to purchase a short sale town home with mortgages from 2 banks on it and the deal fell through. For a reference to how bad the market was at the time that TH sold for $245,000 in 2005. The first bank accepted my offer at $103,100. The second bank drug their feet and by the time they accepted it was past the 90 day mark and I would have had to go back and refile paperwork and start the process over. I was banking on the $8,000 first time home buyer credit but I would have missed the deadline so I backed out. Sold for $85,000 six months later. Bottom line, it's a roll of the dice with short sales and foreclosures. You need to trust your realtor to guide you in the process and do the leg work to answer all of your questions.

Posted on: 5/1 13:36:04
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Re: Buying a foreclosed house
LSF Member
Joined:
10/10/2011
Posts: 302
Just go the sheriffs auction in the city you want to buy in. Buy it for cash, dump tons of money into it and sell it, make $80k-$100k on your investment like they do on flip or Flop.

Posted on: 5/1 15:06:48
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Re: Buying a foreclosed house
LSF Member
Joined:
06/10/2009
From Blaine and Otter Tail County
Posts: 63
That was along the lines of what I was thinking of, Brian. Buying from the foreclosure sale like that does require cash and in a lot of cases, the mortgage holder is still in the house at that point and has 6 months to clear up the debt. Its a bit complicated, but has good potential as a $$ maker.

Posted on: 5/1 15:16:48
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Re: Buying a foreclosed house
LSF Member
Joined:
11/03/2008
From Plymouth, MN
Posts: 473
We bought a foreclosed house 12 years ago. This one was owned by a bank in FL and listed with a realtor. I think we got a decent deal on it but was not a steal like you see on some of the Sheriff's auctions.

You have to do a little extra work and ask the right questions. Like leans on the property and other legal stuff.

Ours had been vacant for over a year so taking ownership was not a concern.

Posted on: 5/1 15:58:25
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Re: Buying a foreclosed house
LSF Member
Joined:
12/04/2008
From Detroit Lakes
Posts: 1668
So my father-in-law and his son were looking into doing a flip about 8 yearsish ago. They had cash and were looking at foreclosed homes being sold by banks. What they ran into was (at least by what their assumption was) the banks all had "preferred" buyers lined up. Basically companies that were paying the banks more for first dibs. It was pretty shady. This was around the Little Falls area. So they would go look at a foreclosed property, call the bank and they would get told something like "the bid process isn't open yet" or "we've already accepted the minimum number of bids". Then they tried doing the sheriff short-sale route, but apparently there's a legal window in which the original owner still has the right to buy the mortgage back and most of the time that's what happened? I'm by no means even a little knowledgeable, but all I know they were ready to buy with cash and never found anything that they could actually purchase. They were actually pretty upset about it for awhile. Now his son is off teaching in another country so they haven't looked since.

Posted on: 5/2 9:03:16
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Re: Buying a foreclosed house
LSF Member
Joined:
12/28/2005
Posts: 1345
Quote:

fishlips wrote:
That was along the lines of what I was thinking of, Brian. Buying from the foreclosure sale like that does require cash and in a lot of cases, the mortgage holder is still in the house at that point and has 6 months to clear up the debt. Its a bit complicated, but has good potential as a $$ maker.


That is probably the route to go if you want to score the absolute best price on a house. You'll just have to be aware that it comes with risk. You may not be able to learn as much about the house and the potential work it may need. The process can take a lot of time and take some complicated twists and turns throughout. However, if you've got plenty of cash, flexible timeline, and ability to absorb the risk there is for sure money to be made there. I have a buddy that has done it several times. He's made some good money from it but even he'll say its far from what the TV shows make it out to be. It involves a lot of time, headaches, money being tied up, uncertainty throughout the entire process from the day you first see the house up to the point you sign on the line to sell it to the next person. He quit doing it once he got married and had a family because it just took too much of his time. He had kept a few properties as rentals and he's even since sold those because it was too much work with family, kids, his real job, etc. He made a pretty good amount off all of them though and lives very comfortably in a half million dollar house now.

Posted on: 5/2 11:50:15
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Re: Buying a foreclosed house
LSF Member
Joined:
06/10/2009
From Blaine and Otter Tail County
Posts: 63
You are correct arne. After the sheriffs auction, the mortgage owner has 6 months to make things right with the bank or loan holder. The loan holder will usually send a rep to the sheriffs sale and will pay up as needed to secure the house and its built up equity - but sometimes there are few bidders and deals to be had, but lots of risk for sure. Not for a 1st timer or even a 2nd timer....

Posted on: 5/2 12:38:07
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