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  1. #1
    Join Date
    Jun. 19, 2009
    Posts
    748

    Default Speak to me of foreclosures. Do we have a shot?

    Quick summary of our house hunting story. DH and I live with MIL (his mom). We need to move. It's not urgent, but we (especially me) are ready. Plus we have a 14 month old and it's just time.

    There's a foreclosure that has been empty for over a year. Was on the market last year as a foreclosure, came off the market last Jan and sat empty all year, and is back on the market as a foreclosure again.

    Dated inside, but is in pretty good shape, is huge, on an acre, great part of town, and we love it. They're asking $296,900. We could probably afford that but with my student loans we don't want to stretch ourselves too thin so we're not going to do that.

    So speak to me of your foreclosure lowball stories. Success? Failure? We're hoping to get it for $200K max. If they say no, then we walk away. And we're ok with that. If this doesn't work out we'll save up a bit more and look in a few months (we had originally planned on waiting, but we've liked this house a long time)

    But I really, really want this house. And really, really want to move. So is there a chance? I just want to know if I should go into it with a glass half empty or glass half full approach. The good news is: the worst they can say is no
    the "I'm In My 20's and Hope to Be a Good Rider Someday" clique



  2. #2
    Join Date
    Aug. 10, 2010
    Location
    NC/SC
    Posts
    324

    Default

    We haven't bid on foreclosures but have bid on short sales. You are really at the mercy of the bank and how much they need to get out of the property, which can be very difficult to figure out. They may take a lowball offer or they may reject it completely or they may counter. They may take a very long time to get back to you and the process can drag out what seems like forever. It sounds like you are in a good place to try to take advantage of a foreclosure since you don't *have* to move by a certain time. Like you said the worst they can say us no, throw it out there and see what happens!



  3. #3
    Join Date
    Feb. 1, 2001
    Location
    Finally...back in civilization, more or less
    Posts
    11,537

    Default

    There is usually some room in foreclosures, but I would not expect to get a 30% discount to the asking price. Bank owned properties are priced according to a formula that the bank uses, so the good news/bad news is that you are not dealing with an emotional private seller, but it also means that they have decided in advance how much of a loss they are willing to take, and that is the bottom line price.

    Get a realtor in your area to pull some comps for you and get an idea of what fair market value is. Base your offer on that, and I'd think you'd have a shot.
    **********
    We move pretty fast for some rabid garden snails.
    -PaulaEdwina


    1 members found this post helpful.

  4. #4
    Join Date
    Feb. 28, 2006
    Location
    The rocky part of KY
    Posts
    9,507

    Default

    We bought with a 30% low offer, but I'll tell ya every penny of our savings had to go into repairs and improvements on the systems in the home. Being left vacant with no heat in the winter isn't good for a house.
    Courageous Weenie Eventer Wannabe
    Incredible Invisible


    1 members found this post helpful.

  5. #5
    Join Date
    Dec. 21, 2005
    Location
    Colorado Springs, CO
    Posts
    1,950

    Default

    Quote Originally Posted by ReSomething View Post
    We bought with a 30% low offer, but I'll tell ya every penny of our savings had to go into repairs and improvements on the systems in the home. Being left vacant with no heat in the winter isn't good for a house.
    Excellent point! Make sure you get this place inspected before you commit to anything or you could end up with a serious money pit.
    "Is it ignorance or apathy? Hey, I don't know and I don't care." ~Jimmy Buffett



  6. #6
    Join Date
    Jun. 24, 2005
    Location
    Alabama
    Posts
    9,256

    Default

    I agree about the home inspection, and if it's on septic, then get a pro in to look at the system. Check with the city or county assessor's office to see if there are any easements, or other encroachments. Check with the bank or the agent, and see what the current price is, because after a certain amount of a time usually the price keeps dropping, but the real estate listings may not have been updated. Around here there are a couple of agents that only handle foreclosures, and they do the bare minimum of marketing, and don't update prices, so your house listing might not be accurate either.

    And try to talk to any neighbors about the house, because they can tell you a lot about the house.
    Last edited by JanM; Jan. 5, 2014 at 04:43 PM.
    You can't fix stupid-Ron White



  7. #7
    Join Date
    Apr. 18, 2010
    Posts
    1,974

    Default

    Make an offer, if bank rejects it you can always make a counter offer. Many banks like accepting all cash offers on foreclosures so if you are going to be financing, see what they say if financing is part of offer.



  8. #8
    Join Date
    May. 25, 2009
    Location
    Branson
    Posts
    111

    Default

    Quote Originally Posted by Lucassb View Post
    Bank owned properties are priced according to a formula that the bank uses, so the good news/bad news is that you are not dealing with an emotional private seller, but it also means that they have decided in advance how much of a loss they are willing to take, and that is the bottom line price.
    It is a bit more complicated than that, and not nearly so cut and dry. Much depends upon how much the bank had to bid at the foreclosure sale to take the property back, the financial condition of the bank including how much they have outstanding in classified loans and their capital ratios, whether they are on formal agreements with their regulator or their financial ratios are such that their regulator is putting pressure on them, and many other variables. Sometimes you can get a bargain price on a particular foreclosure, and sometimes not. Many of the variables are not static and vary from month to month and quarter to quarter, again depending upon the bank's situation.


    2 members found this post helpful.

  9. #9
    Join Date
    Mar. 24, 2004
    Location
    Pottstown, PA (East Coventry)
    Posts
    3,222

    Default

    A few months ago a house near me went for auction as a foreclosure. On Zillow there was a grid on how much the bank was owed and when the loan was from. You could see how much the house originally sold for then the multiple home equity loans.

    I does appear that you now need to log into foreclosed homes and did not have to before.
    Oh, well, clearly you're not thoroughly indoctrinated to COTH yet, because finger pointing and drawing conclusions are the cornerstones of this great online community. (Tidy Rabbit)



  10. #10
    Join Date
    Jan. 26, 2006
    Location
    Fort Worth, Texas
    Posts
    4,701

    Default

    Back in the day when I was a bank officer when we took an asset that had been used to secure a loan we had a fiduciary responsibility to obtain the highest price we could for the asset .

    We just couldn't give it away; we had to make an honest attempt to get as much as possible and these actions were reviewed by the state banking commission during our audits.



  11. #11
    Join Date
    May. 25, 2009
    Location
    Branson
    Posts
    111

    Default

    Quote Originally Posted by SonnysMom View Post
    A few months ago a house near me went for auction as a foreclosure. On Zillow there was a grid on how much the bank was owed and when the loan was from. You could see how much the house originally sold for then the multiple home equity loans.

    I does appear that you now need to log into foreclosed homes and did not have to before.
    While that is good information, the amount the bank is owed is not necessarily a meaningful number. Banks are not just free to bid in the loan balance at a foreclosure. They are required to bid a fair market value. On the flip side, there are restrictions on how long OREO (bank-owned foreclosed real estate) may be held. The bottom line is that many people (not necessarily you) don't realize the restrictions under which a bank must operate and make the incorrect assumption a bank can sell OREO (foreclosures) for whatever it wants. Not true.

    FYI for those that may be interested, here are the OCC (one of the federal bank regulators) guidelines. Other federal regulators have very similar guidelines, as do state regulators for state chartered banks.

    http://www.occ.gov/publications/publ...ook/a-oreo.pdf



  12. #12
    Join Date
    Jul. 29, 2006
    Location
    Colorado- Yee Haw!
    Posts
    3,098

    Default

    Was it a foreclosure or a short sale the last time it was on the market? Did it just come back on the market? Our experience is that in the first 30-60 days they usually are not very interested in negotiating.

    If you google the address can you see what the bank paid for it at the foreclosure auction? Our county records are online so you can see them.

    30% seems like a really big discount esp if it just came back on the market. We just bought a short sale and we got agreement at ~90% of list (then took of another 7% in a new offer based on inspection - like earlier due to it being left in heated for a winter). It had been on the market for a few months at the latest price when we offered and a higher price for months before that. That said we negotiated for 7 months to close it. At least with a foreclosure you shouldn't have to deal with it.

    I agree with having a realtor pull sold comps for you. Depends where they priced it relative to market.



  13. #13
    Join Date
    Sep. 8, 2012
    Posts
    155

    Default

    We bought a foreclosure. It started at $174,000. Was down to $147,000 when it was listed in the local Homes and Land. When we called about it it was down to $139,000. We got them down to $123,500.

    Make sure to put it contingent on a home inspection. Ours did not have an inspection BUT we had already gone through the house and found all of the problems. They were all things we could do-paint, clean, etc.

    It took us 3 months to get the house ready for us to move in. Thankfully we still had our old house to live it while we worked on the new house.

    Good luck and all they can do is say nope.

    Kim



  14. #14
    Join Date
    Oct. 15, 2007
    Location
    the heartland
    Posts
    220

    Default

    Make your offer based on as much data as you can accumulate. Foreclosure pricing is a matter of over time the bank or entity holding title to the property accepting the reality of market value. They might start out with one figure, but drop that over months of time based on interest and solid offers. Make an offer. Wait. Make another offer. It might be quite a bit of work to wait and keep trying.

    Keep shopping. Don't put all your hopes in one property.



  15. #15
    Join Date
    Apr. 2, 2003
    Posts
    4,944

    Default

    Quote Originally Posted by sparky6 View Post
    Quick summary of our house hunting story. DH and I live with MIL (his mom). We need to move. It's not urgent, but we (especially me) are ready. Plus we have a 14 month old and it's just time.

    There's a foreclosure that has been empty for over a year. Was on the market last year as a foreclosure, came off the market last Jan and sat empty all year, and is back on the market as a foreclosure again.

    Dated inside, but is in pretty good shape, is huge, on an acre, great part of town, and we love it. They're asking $296,900. We could probably afford that but with my student loans we don't want to stretch ourselves too thin so we're not going to do that.

    So speak to me of your foreclosure lowball stories. Success? Failure? We're hoping to get it for $200K max. If they say no, then we walk away. And we're ok with that. If this doesn't work out we'll save up a bit more and look in a few months (we had originally planned on waiting, but we've liked this house a long time)

    But I really, really want this house. And really, really want to move. So is there a chance? I just want to know if I should go into it with a glass half empty or glass half full approach. The good news is: the worst they can say is no
    This really depends.

    Is $200k a fair price for the house?

    It is not my experience that a bank that has a foreclosed property will overvalue it by 30%.

    Food for thought.



  16. #16
    Join Date
    May. 25, 2009
    Location
    Branson
    Posts
    111

    Default

    Quote Originally Posted by shall View Post
    Make your offer based on as much data as you can accumulate. Foreclosure pricing is a matter of over time the bank or entity holding title to the property accepting the reality of market value. They might start out with one figure, but drop that over months of time based on interest and solid offers. Make an offer. Wait. Make another offer. It might be quite a bit of work to wait and keep trying.

    Keep shopping. Don't put all your hopes in one property.
    Banks do not establish market value. In the case of foreclosures and OREO, banks are required to obtain periodic independent appraisals from a credentialed appraiser...



  17. #17
    Join Date
    Dec. 4, 2005
    Location
    washington state
    Posts
    9,682

    Default

    No harm in making an offer, but the poster who warned of after sale expenses is dead on!

    I bought a foreclosure, got a good deal and closed in 5 weeks. The bank (AmericaWest out of Spokane) was wonderful, good communication, and timely. I have heard that this is not the experience of those who deal with BofA and Wells Fargo, also Key bank. Just an FYI. However, the water heater shorted out and the test plug was left in the line, I paid $1300+ two days after closing resolving those issues!
    The Knotted Pony

    Proud and upstanding member of the Snort and Blow Clique.



  18. #18
    Join Date
    Aug. 9, 2007
    Posts
    9,173

    Default

    I'm kind of confused here. Did the house go through foreclosure and no one bid on it but the lien holder? If so, all liens on the house except any federal liens were wiped out. So the lien holder or bank has put the house on the market several times, and no one has bid on it? Excuse all the questions, but I dated for a year a guy who bought and sold foreclosures in Atlanta, and since I worked at the courthouse, he'd often call me and ask me to run down to the basement to check liens and deeds. I guess things have changed since the internet, but back then everything was in big dusty books, and lots of title lawyers and other researchers was very helpful to me in looking up stuff.

    You can go to the courthouse in the county in which the house is located, and find all the information on the place. Like how much it sold for, what the loan was on the house (the loan document is in the book right after the deed), and you can find out everything owed on the place. And find out how much was owed at the time of foreclosure. And it now should be on computers in the bowels of the courthouse. If the bank or whomever foreclosed on the house hasn't been able to sell it, the only thing that they'll say to your offer if they think it is too low is "nope." Or they'll make a counteroffer. "They" being the agent.

    If you are pre-approved for a loan, you can go down to the courthouse steps on foreclosure sale day and bid on property being sold. My now ex-boyfriend used to visit the houses in foreclosure, talk to the owners, and sometimes if they didn't have lots of other liens against the property, he'd pay them $10,000 or so over the amount owed on the place and get a quit claim deed. He made a lot of money reselling the houses and then selling off the mortgages.

    So go to whomever foreclosed on the house, and make your offer if you have been pre-approved for the loan. And be prepared for a counteroffer somewhere between the asking price and your offer. You may want to offer less than 200,000 and be prepared to go up to that amt or above. And remember, foreclosures usually have some disrepair as the owners did not have the money to make repairs. Unless the lien holder made them after foreclosure.



  19. #19
    Join Date
    Jun. 19, 2009
    Posts
    748

    Default

    Thanks for all the input!

    cloudyandcallie I'm not really sure what happened with this property. The time line, according to Zillow was: Home originally listed for sale in 2010, several price drops, removed from market in March 2012. Short sale listing in May of 2012, removed from market in August 2012. Listed as foreclosure through Homepath in Nov 2012, listing removed in late Dec 2012. Listed again through Homepath in Nov 2013. I don't know why it sat vacant and not on the market for a year. Our realtor wasn't sure either, all he could tell us was that there haven't been any offers on it since its most recent listing. Price has dropped significantly over that time.

    We will DEFINITELY make it contingent on an inspection. Our impression on the viewing was it seems to be in pretty good shape, just needs some cosmetic and design changes. We are totally willing to do the work and also understand there may be more underlying issues, which is why we want an inspection.

    The fact that they've had no luck selling it for 3.5 years does raise a red flag, but homes over 200K in our area are moving much, much more slowly, if they move at all. We'll be pre-approved by the bank and have a thorough inspection if we get the bank to entertain an offer we can afford.

    Our attitude is, we feel this house could be a great deal. We aren't quite ready to look, but we also don't want to pass up this location and this property if we can negotiate. If we can't then that's ok. We understand the bank does want to get as much out of it as possible, and if they don't want to drop their price that much I definitely understand. But if they do, I am happy to take it off their hands Who knows, if it falls through now, maybe we could come back with a better offer in a few months if it's still around. If it's not then we'll find another place!
    the "I'm In My 20's and Hope to Be a Good Rider Someday" clique



  20. #20
    Join Date
    Apr. 20, 2011
    Posts
    805

    Default

    Quote Originally Posted by ReSomething View Post
    We bought with a 30% low offer, but I'll tell ya every penny of our savings had to go into repairs and improvements on the systems in the home. Being left vacant with no heat in the winter isn't good for a house.
    ours had been vacant for a couple of years before we moved in, and it's older, so has horse hair plaster walls with some sort of "skim coat"?? over the plaster.

    after we moved in we'd be sitting and watching TV and could literally hear and watch the skim coat crack. scared the wits out of me more than once, for sure! I thought we were haunted LOL



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