Buying foreclosed houses/Sheriff sales

**Laughing_Gnome_Invisible** · 09-09-2008, 11:49 AM

My SWMBO and I want to take advantage of the current housing slump and loan the money for her daughter and her SO to buy a starter house in our vicinity. We've started looking around, and are researching as best we can on buying foreclosures and Sheriff's sales. We will be going to a Sheriff's sale next week just to get the feel of them. We are looking at anything from good condition to a fixer upper, as we have construction talents to do the work ourselves.

This thread is just a general request from anyone with experience in them. Do you have any tips, pitfalls, warnings, horror stories, success stories that might be helpful to me? As I say, we are still researching, but any extra info we can glean would be a bonus to us.

Thanks.

Ryan_PA · 09-09-2008, 01:40 PM

I am in a similar situation, but got here a weird way. My wife and I had a contract to buy a home, then found out the seller had signed the deal for less than they owed, then started the short sale process through the bank, then found out it was going to sheriff sale in October due to back taxes.

I feel we are lucky for a few reasons. First, we are positioned to get the home fo a large amount less than what we had originally contracted. Second, the mortgage rates are kicking butt and expected to get better next month. We had a lock of nearly 0.7% higher than the current rate. And finally, due to the uniqueness of my situation, we had a pre sale walk through and inspection of the property we will be bidding on. My county does not allow either for Sheriff Sales, but since we saw it prior to the sale as a conventional real estate buyer we know the whole story, and can feel better bidding higher if needed.

I am doing like you, and going to the September sale to prepare to bid in October. The questions I need to understand is based around payment, like how conveyance is handled and title comany arrangements. I cannot pay 100% cash, so there will be a mortgage on the property. I just need to get a better handel on this piece. Also, my county requires 10% cash or certified check the day of the sale. I want to understand the time frame on it, since I do not want to roll up with a suitcase full of cash, adn I cannot get a cert. check before since I do not know the final bid amount.

Best of luck with your situation man.

jcarson83 · 09-09-2008, 01:50 PM

I just bought a short sale from Countrywide. They were in the process of foreclosing on the people and I bought it before they could finalize it. It was definitely learning experience and I might not have done it had I known what it was going to take. I did get a great deal, probably better than if I had bought it on the court house steps. It took just under 3 months from the initial offer to closing and a lot of work.

Ryan_PA · 09-09-2008, 01:59 PM

Quote:

Originally Posted by jcarson83

I did get a great deal, probably better than if I had bought it on the court house steps.

I am curious on what you are basing this on?

jcarson83 · 09-09-2008, 02:16 PM

I bought it for less than an investor would have been willing to pay for it to make it a rental, and better than similar houses sold for in the same neighborhood. Probably being key since I may have been the only one to show up to the sale.

jcarson83 · 09-09-2008, 02:33 PM

Quote:

Originally Posted by Ryan_PA

I am in a similar situation, but got here a weird way. My wife and I had a contract to buy a home, then found out the seller had signed the deal for less than they owed, then started the short sale process through the bank, then found out it was going to sheriff sale in October due to back taxes.

I feel we are lucky for a few reasons. First, we are positioned to get the home fo a large amount less than what we had originally contracted. Second, the mortgage rates are kicking butt and expected to get better next month. We had a lock of nearly 0.7% higher than the current rate. And finally, due to the uniqueness of my situation, we had a pre sale walk through and inspection of the property we will be bidding on. My county does not allow either for Sheriff Sales, but since we saw it prior to the sale as a conventional real estate buyer we know the whole story, and can feel better bidding higher if needed.

I am doing like you, and going to the September sale to prepare to bid in October. The questions I need to understand is based around payment, like how conveyance is handled and title comany arrangements. I cannot pay 100% cash, so there will be a mortgage on the property. I just need to get a better handel on this piece. Also, my county requires 10% cash or certified check the day of the sale. I want to understand the time frame on it, since I do not want to roll up with a suitcase full of cash, adn I cannot get a cert. check before since I do not know the final bid amount.

Best of luck with your situation man.

I did my homework on this as well since Countrywide was in the process of foreclosing at the same time we were negotiating. All my county requires is a letter from the lender at the time of the sale and a check within a few hours. Your lender will probably be familiar with this stuff and should be able help you. Even most investors wouldn't want to pay 100% cash and the county would be limiting their potential buyers if they required that.

Philip1993 · 09-09-2008, 02:45 PM

Quote:

Originally Posted by Ryan_PA

I am doing like you, and going to the September sale to prepare to bid in October.

Absolutely go and watch before you go to bid. Most auctions are not structured. A lawyer (or 4) will just walk up read the forclosure notice and start the auction wherever he sees fit. Multiple auctions may take place simultaneously, and there is no schedule. Have several properties identified and be prepared to deal with more than one of the being sold simultaneously. Also be prepared to stay all day. One may sell at 8:05 and the other and 4:59

Quote:

Originally Posted by Ryan_PA

The questions I need to understand is based around payment, like how conveyance is handled and title comany arrangements. I cannot pay 100% cash, so there will be a mortgage on the property.

This varies widely, but foreclosures want cash on the barrelhead.

The lawyer is the closing attorney as well. They will handle the title and overpayment refunds in a few days. They may or may not offer to handle title insurance. If you want your own legal counsel, bring 'em with you.

Quote:

Originally Posted by Ryan_PA

I just need to get a better handel on this piece. Also, my county requires 10% cash or certified check the day of the sale. I want to understand the time frame on it, since I do not want to roll up with a suitcase full of cash, adn I cannot get a cert. check before since I do not know the final bid amount.

It's a cash sale. That means you need to take cash, cert check + cash, or a check over the amount of your bid. The lawyer is the closing attorney as well. They will handle the title and overpayment refunds in a few days.

Philip1993 · 09-09-2008, 02:49 PM

Quote:

Originally Posted by jcarson83

I did my homework on this as well since Countrywide was in the process of foreclosing at the same time we were negotiating. All my county requires is a letter from the lender at the time of the sale and a check within a few hours. Your lender will probably be familiar with this stuff and should be able help you. Even most investors wouldn't want to pay 100% cash and the county would be limiting their potential buyers if they required that.

There is a big difference in the way things are handled pre-forclosure and the way they are handled on the courthouse steps. There is also a big difference in the way they handle tax sales (county is seller) and foreclosure sales (lender is the seller).

For instance, with tax sales the debtor usually has a grace period to redeem their property. That means that even after you buy it, the "owner" can hand you a check and reclaim the property. With a foreclosure, no such right exists. Obviously, rules and procedures vary widely by state, so these are general rules of thumb only known to be correct in Ga.

brewt00l · 09-09-2008, 03:11 PM

Quote:

Originally Posted by Ryan_PA

I am doing like you, and going to the September sale to prepare to bid in October. The questions I need to understand is based around payment, like how conveyance is handled and title comany arrangements. I cannot pay 100% cash, so there will be a mortgage on the property. I just need to get a better handel on this piece. Also, my county requires 10% cash or certified check the day of the sale. I want to understand the time frame on it, since I do not want to roll up with a suitcase full of cash, adn I cannot get a cert. check before since I do not know the final bid amount.

Best of luck with your situation man.

I dunno how Del county is going to work but I have been to a slew of them in Bucks.

*Look for all the people hanging out with their folders and worksheets from one of the late night infomercials looking to strike it rich, pretty sad and funny all at once.

The overwhelming majority of action is mortgage company's rep assuming the property. Of the situations where a third party bids and wins on the property, most of the time the deal was already pre-arranged with the mortgage co and the SS was a formality. When a random person bids on a property, the mortgage co lawyer will generally go right up to market value (effectively pricing the bidder out of the running).

nyer · 09-09-2008, 08:29 PM

I bought my home 10 years ago as a foreclosure. I bought it directly from the bank, there was no auction. The bank had the deadbeat owner evicted by the sheriff and I heard about it. I called the guy from the bank that was taking care of it and asked to buy, they agreed and I financed with them. I had to pay what was owed to the bank as well as back taxes. I ended up paying about half what it was worth. At the time I was young without much money so it was pretty much all I could afford. I replaced the carpets and repainted everything to make it nice before moving in. Over time I also replaced the bathroom, kitchen, flooring, shingles, doors, windows and finished up an unfinished addition. Outside I added a large deck with built in hot tub and a pool. I did everything myself when I could afford to pay cash. I kept track of what I have in it and what it's worth. I will have it paid for in 4 years and will be able to sell for a very nice profit. I would do it again in a heartbeat.

In my area the Sheriff Auctions are a fiasco. Every slumlord in the area bids up the homes. I would recommened calling or stopping in at banks and asking what they might have for foreclosures. Try like hell to buy it before the auction. The bank explained to me that they were saving money by selling to me quickly and easily. They were happy to get what they were owed and I was happy to buy a house cheap.