Buy Foreclosed Homes

I’m 18 and i think i have enough money to buy a foreclosed home is it legal for a 18 yo to buy a house?

Sure, go for it.

I am considering buying a foreclosed home but I am not sure if that’s right thing to do. So I guess I am more interested in cons of buying a foreclosed property?

Thanks

Well, the cons are typically as follows:

1. Foreclosed upon homes typically are in a state of disrepair as the owner could not afford it.
2. There is rarely any ‘warranty’ on the house, it’s purchase as-is and you really don’t know what could be wrong with the house
3. Many times its a closed bid process and you have no idea what anyone else is bidding causing you to bid higher to get the property.
4. It’s hard to set up a time to get a home inspector to look at the house before the bid is due.

There’s more, but those are the most important. It’s riskier than buying a home the normal way, which is why they are normally cheaper.

Are these seminars worth the time? Can someone recommend the best way to learn how?
Thanks.

You might attend the seminar and many more as they come to town. Never buy anything but just grab a few free ideas and network with others there. The usually best info isn’t at the seminar, it walks in and leaves after. It is some other attendee that was also curious. You will meet others at seminars that can mentor you. The ideas you hear you can write down and research for free at your local library or bookstore. You can also hit on a few names here and read their answers. The best courses that exist are right here for free if you take the time to read the already answered questions. Pay less attention to the personal marketing attempts type answers and you will find a great course, for free.

Foreclosed houses are really good for investment. If you find a good deal you can flip it and sell to gain a good profit fast. Before you buy a foreclosed house, you need to call an inspector, they could see important details that you don’t see. For example, a house could have an electricity problem, mold inside the walls, water drainage is broken, etc. Remember that this type of houses are not going to be in good condition, so you will need money to renovate it. If you don’t have the money, you can find an investor where he/she put the money and you can put the labor, and you can split profit half in half. If you want to invest, I say go for it, if I have the money I immediately do it. So Good luck!

I am 18 years old and I have a few dollars saved up.What exactly do I have to do to own a foreclosed house? In Brooklyn, NY about how much will it cost for me to buy a foreclosed house? And after I own it how do I go about selling it for profit?

By a foreclosed house do you mean what is called a Real Estate Owned Proporty (REO) that the bank bought back at the Trustee Sale or do you mean actually buying a property at the Trustee sale?

If you mean a REO property, the lenders list those properties with a Real Estate Broker. Those properties are listed on the Multiple Listing Service of the Real Estate Brokers.

If all you want to do is buy a REO property you can contact any Real Estate Broker and they will be more than happy to sell you one of the overpriced REO properties in their inventory.

Those properties are generally overpriced for what they are. The properties are generally sold "as is" and generally have $100,000 to $200,000 in damages and deferred maintenance that needs to be repaired.

Generally the banks overprice these properties. They usually only allow a discount of $40,000 to $50,000 for the damages, even though the amount of the damage will cost $100,000 or more to repair properly.

The REO properties are priced less than the other properties in the neighborhood because the REO properties need an enormous amount of very expensive repair work.

Unfortunately the REO properties are not discounted suficiently to compensate for all of the work that is needed.

The banks are already losing money because they made loans for more than the house was worth.

In General the properties that are in good condition that you can find on any Multiple listing Service are better values than the bank owned REO properties, as long as you negotiate the price properly so that you pay fair market and nothing more for the property.

There is a very detailed list of guidelines that I have written in answers to various questions on this site and that I will publish in a book that I am writing about successful real estate investing. I will not repeat those guidelines here, because I have listed them already on my answers to many other questions on this site. If you want to see my guidelines, I refer you to my answers to previous questions on this site.

If you follow the guidelines that I have prepared anyone can purchase a property at its true fair market value and not a penny more. (That in itself is quire an accomplishment) Most people pay far too much for a property because they do not understand how to negotiate.

I give you detailed step by step instructions that anyone can follow to negotiate true fair market value, and not some ridiculously over priced number that most people pay when they purchase a house.

The banks have been putting out a lot of publicity about how great a deal their REO properties are.

The reason that he banks do that, is that the banks want unsophisticated people to think that the REO properties are a good deal so that the banks can sell those properties for more than they are worth and recover some of their losses.

Also do not be fooled by the marketing hype that promises property for "pennies on the dollar"

I guarantee you there is no such thing. Any property that is priced below fair market value will draw a number of competitive offers that will push the price back up to fair market value.

In some parts of the United States the fair market value has dropped so much that when compared with the price that property would have sold for one or two years ago, the fair market value of today looks like pennies on the dollar, but is really the fair market value on today’s market, not "pennies on the dollar".

With respect to purchasin property that is currently in foreclosure, I will give you the procedure for Trustee’s slaes in the State of California where I live and where I do business.

If you wish to purchase a property at the Trustee’s sale you must become very good at searching the title for liens and determining what position the lender’s interest is that you are buying.

Remember, at a Trustee’s sale you are only buying the interest of the property that the lender had in that property. You are not necesarily buying the property itself.

I will tell you about the case of one unfortunate young man that I witnessed here in San Jose, California.

A property had been foreclosed by the lender.

From my research I determined that the property had a fair market value of $350,000.

The owner had purchased the property with 100% financing for $390,000. The owner had already paid $40,000 to much for the property and the lenders of the first and second mortgages had lent $40,000 too much on the property.

The lenders made a loan in first position of $312,000 and a loan in second position of $78,000 for a total of $390,000.

The homeowner had not made payments for about six months by the time this property came to the Trustee’s Sale.

The unpaid interest and penalties added to the loans had inceaased the amount of the first to be almost $350,000 by itself.

As it happened the lender in second position was the first to file for foreclosure and was the first to make it to the Trustee’s sale on the courthouse steps..

The amount owed on the second by this time was approximately $90,000.

The Trustee opened the bidding at $20,000. A young man bid the $20,000 and bought the interest of the holder of the second loan.

That meant that he also had to pay off the holder of the first loan. The amount of the first with interest and penalties was already $350,000, the fair market value fo the property.

Essentially the young man had just paid $370,000 for a property that was only worth $350,000. However the young man did not know that yet.

The young man was very proud of himself. He went around to other people at the Trustee sale telling them that he had just bought a property for $20,000.

Unfortunately the young man had not done his homework. He did not know about the $350,000 loan in first position that he had to pay off.

It gets worse.

The young man refused to pay the holder of the first. He thought that he had bought this property and it was his.

The holder of the first foreclosed and bought the property back at their Trustee sale. The holder of the first submitted the loan amount as their bid.

The young man lost the property to the holder of the first and essentially lost his $20,000 cash.

You might be thinking "but Mike, surely the young man is entitled to a refund or perhaps he could stop payment on his check or reverse the charges on his credit card, or perhapes the title insurance policy would reimburse him for his losses."

If that is what you are thinking you are wrong.

Properties sold at Trustees sales are sold without any guarantees of any kind. The only checks that are accepted at Tustee’s sales are cashier’s checks that you buy from the bank for cash. There are no refunds..

They do not accept credit cards at Trustee’s sales. There is no financing. you pay cash only at a Trustee’s sale.

There are no inspections. There are no refunds and there are no contingencies of any kind.

You get no guarantee of good title, you get no title insurance and you do not even get posession of the property.

The previous owners are still in the property and the previous owner still thinks that they own the property. You have to evict the previous owners.

Also, the previous owners often become quite upset when they discover that their house has been sold on the courthouse steps at a Trustee’s sale and they completely destroy the house.

I recommend that you do not buy a foreclosed house. As an REO property it is over priced and at the Trustee’s sale there is an extraordinariuly high amount of risk and a very steep learning curve.

My recommendation is to buy a property that is in good condition from a willing seller and follow my instructions to the letter when you are negotiating the fair market value price, which in most cases is substantially less than what the seller is asking for the property.

However if you do not follow my instructions exactly and to the letter, and in great detail you will not get fair market value.

You will pay too much if you do not follow my instructions exactly to the letter.

Again, I will not repeat my instructions for how to negotiate fair market value. I have already published those instructions in many of my answers to questions in this section.

I refer you to my previous answers in this section, or my book on successful real estate investing when it comes out in the bookstores in the next few months

. .

I want to buy a cheap home to live in for a short time(2 years) because I’m in the military. I’m interested buying a foreclosed home as an investment. Can you buy a foreclosed home and flip it? Contact me at my e-mail address if you can help me. At david_trapnell@yahoo.

Usually forclosed homes are sold with a prefreance to single family owners 1st. If the bids come in too low for a single family buyer then it opens up to investors…so if you look around you should be able to find one that has opened up to all buyers…

In order to fix them up and sell to the general public…
I am looking for a way to learn about this business so that I don’t get burned once I get into it and spend the money.
Thanks.

Go to your local sheriff’s sales, start talking to people there…you’ll learn a lot just by asking people. The other thing that will be helpful is to find a local real estate investor’s club and attend a meeting. You’ll learn a lot there.

I have found a foreclosed property (REO) that I wish to buy from the Lender / Trustee. Cant leave a message with the phone # provided and I am unable to get any other info.
What is the best way to go about buying such a property?
This is in the state of California. Can this be bought as an investment property or does it have to be owner occupied.

The reason that the lender is not returning your calls is that the lender is not interested in dealing with you directly. Lenders procure the services of real estate firms to dispose of foreclosed properties.

Why do they do so ? Because the large lenders such as Countrywide, WaMu, and ABN AMRO lend in all fifty states and just do not want to be bothered with knowing the different real estate laws and practices of fifty different states. So they hire real estate brokerages in the state where the property is located to handle the work for them.

People from China are here to buy the foreclosed homes. Whos to say there will not be Sunni, Shiite Muslims, or Bin Laden, Al-Quada, terrorist, buying the homes. If it is really our money in this bailout, I vote no to foreigners buying anything in the United States. Where does our government get off trusting these people?
And what a price the United States of America has paid for the thought of peace.

I agree…I think the US needs to beef up their immigration laws. I understand that America is the land of opportunity yada, yada, but we have to draw the line somewhere.

we keep getting mixed advice on how to go about buying a house and foreclosed house. Any advice on how to even start searching, what to look for, and what to watch out for is more than appreciated.

Thanks in advance!!!

DON’T DO IT. Too many things that can and will go wrong before and after you buy a for closure. It is better to buy a REO, which is bank owned property. No tax liens no other claims once it is an REO. Most likely a better price.

As an FYI… per the Federal Trade Commission (FTC) http://www.ftc.gov/freereports , there is only one source for you to get a free credit report from all three credit repositories, “annualcreditreport.com”. https://www.annualcreditreport.com/cra/index.jsp

Do not give anyone else your personal info without seeing them in person.

Make sure to price out your loan with your LOCAL banks and mortgage brokers only.
A lot people giving advice on here are also looking to give you a loan (it’s not advice, its advertising), if they are not local to you and you can’t get to them within 1 hour don’t fall for it. They say they are licensed in all 50 states, what does that mean? Which state do you have to look in first if something goes wrong? KEEP IT LOCAL; DON’T GET RIPPED-OFF BY SOMEONE IN WHO KNOWS WHERE WHICH YOU WOULD HAVE NO DIRECT ACCESS TO.

Remember Buddha’s advice:
"Believe nothing, no matter where you read it or who has said it, not even if I have said it, unless it agrees with your own reason and your own common sense." You are the only "expert" you can trust: All brokers, and every other loan officer guru giving advice here with a .com or contact me at the end is "selling" you something (it’s not advice, its advertising). Don’t buy "it."

When shopping for a mortgage, here are a few things to do to maximize your savings and time:
1. When asking for a Good Faith Estimate(GFE), tell each mortgage originator (lender) what interest rate to use so you can compare apples to apples (rate affects closing costs). This is probably a different thought process for you because you always shop interest rates on a mortgage right? Remember all mortgage originators have identical wholesale interest rates. If you shop the same interest rate among mortgage originators, it levels the playing field and discloses what they want to charge you for their time to originate and close your mortgage. It is similar to shopping for a car. Why does the exact same new car vary in cost from one dealership to the next? Some dealers want to make more profit than others.
2. Secure Good Faith Estimates from various mortgage originators within a 4 hour time frame (rate and pricing can change daily and even multiple times in one day).
3. Do not compare the prepaids, reserves, escrow, title charges, and government recording sections of the estimates; third part fees are not controlled by the mortgage originator.
4. Ask each mortgage originator to base the interest rate on a 30 day lock unless you need longer.
5. If the loan allows you to waive escrow (paying taxes & insurance yourself), let the mortgage originators know because this will affect closing costs.
6. If refinancing, let the mortgage originators know if you are pulling cash out. A cash-out refinance usually increases closing costs.
Your Biggest Challenge
The mortgage industry today has never been more unethical. The industry has produced several record-breaking years in a row regarding total origination and as a result, greed is driving the industry. Your biggest challenge is receiving a Good Faith Estimate that is provided to you in "Good Faith"! We spend more time showing consumers how mortgage originators are lying to them in regards to an estimate given! That’s right, lying! “Bait and switch” has become a prominent sales tool in the mortgage industry. Bait you in with a bogus estimate then switch things after you are hooked. This is so discouraging; banks and so called direct lenders have become some of the worst at this practice. Education is your biggest weapon against this practice. Take the time to fully understand closing costs and rates before proceeding.
You should know exactly how much the mortgage originator is getting paid by all sources (no matter where it comes from, it’s ultimately coming out of your pocket). Protect yourself by asking for and receiving prior to application and origination a written guarantee stating the TOTAL amount of compensation (YSP, rebates, commissions, kickbacks) that will be received and kept by the mortgage originator. This will help assure that your best interest is kept in mind.
Originating a mortgage is a service, not a product; compensation should not be based on the loan amount or interest rate.
All ethical, honest, upfront, transparent mortgage originators will be more than willing to provide you with a written total compensation guarantee in addition to the (GFE) Good Faith Estimate (focus on the word “Estimate” because that is exactly what it is, an estimate of charges) prior to originating your loan.