Buying foreclosed houses/Sheriff sales

[Laughing_Gnome_Invisible]

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]

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]

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]

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]

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]

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]

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

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.

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]

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]

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]

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.

 

[Ryan_PA]

A new day a new surprise. I will not have the luxury of going to one auction to experience the process. The home I was going to bid on next month was moved to next week. I think it is actually a good thing. I would rather it be over with either way. If it does not work out, I will at least know what my current options are without this home lingering over my head.

 

[brewt00l]

Good luck!

 

[Philip1993]

A new day a new surprise. I will not have the luxury of going to one auction to experience the process. The home I was going to bid on next month was moved to next week. I think it is actually a good thing. I would rather it be over with either way. If it does not work out, I will at least know what my current options are without this home lingering over my head.

Based on your last comment, I would recommend you think hard about buying at auction before you proceed. Homes bought at auction are often problematic with respect to repair, ownership, transfer, etc. These problems are often (but not always) outweighed by the cost savings you can realize. As such, auctions are a great place for people who are seeking a bargain, but not great places to go shopping for your dream home.

Your comments seem to indicate that you have one particular home in mind, as opposed to just a home. Be careful. When you have a home in mind, you tend to become emotionally invested in that home. And that may color your judgment when inspecting, bidding, etc.

I'm not saying don't do it, just mentioning that I'm hearing language that raises red flags. Proceed with caution, and be aware of how the process is impacting your objectiveness.

 

[Ryan_PA]

Based on your last comment, I would recommend you think hard about buying at auction before you proceed. Homes bought at auction are often problematic with respect to repair, ownership, transfer, etc. These problems are often (but not always) outweighed by the cost savings you can realize. As such, auctions are a great place for people who are seeking a bargain, but not great places to go shopping for your dream home.

I hear you, but I have had the rare situation on my hands were I actually have a home inspection report for the home I am bidding on. This was a deal that fell apart on me as a conventional real estate buy. I have been trough enough bruising where I am not emotionally tied to the property. This is the forth home we had a contract on and blew up for one reason or another, we have other options on the table now too, just wanted to see this one through to the end.

Do you happen to know anything about the deed not being handed over to us for up to 90 days after full payment is made? Also, my realtor (the person who stands to make a 0% commission if I buy at the sheriff sale) is telling me that there is a lot of risk for an individual buyer. For example, there are complications if the old owners file for bankrupcy, if additional liens or debts are found after purchase, and we do not get a receipt or settlement sheet. Is any of this true?

 

[Laughing_Gnome_Invisible]

I went to a Sheriff's sale yesterday to have a look see what happens. Man, those bank's reps are brutal! Out of 6 auctions there was one no sale and the rest went to the banks for too high a price. There were only two private bidders there and they both got murdered as the bank's reps upped the bidding in increments of 5, 7, then $10,000 to meet the foreclosure values. What we need to do is keep an eye on a place and then after the bank has won the auction, make an offer to the bank the next day at the price we want to pay, or wait until they put it on the market at a knocked down price. It was quite an education!