Foreclosures.

[SusanBAnthony]

Anyone want to give me an overview of what I need to know?

We looked at one last weekend with 4 bids in.  We didn't bid since it appeared to have foundation issues.  Now there is another one that I am thinking about seeing (the kitchen island house, in my other post).  This particular house is out of our budget, but if it is nice I am happy to put in a low offer on the off chance they don't get any other offers.  

Is it common to low ball foreclosures?  My realtor seemed to think so, but he also thought the bank wouldn't actually sell it that low.  Do banks eventually take whatever offer they get (even if it is low) if there have not been any other offers after some amount of time?  Or do they just keep waiting until they get a higher offer?  

I don't want to waste anyone's time including my own if there is no chance. But I really know nothing about them, and i want to learn more.

[candreco]

In our case, the listing price was the bank's low figure, but that may vary by region and by bank. We offered that, requested something toward closing costs and a home warranty assuming that we would end up dropping those in negotiations. Surprisingly, the bank just accepted our offer. Of course, this was after two contracts on the house as a short sale that the bank let expire because they couldn't get their stuff in order, and one more expired contract on it as a foreclosure. All told, it took over a year to buy that house.

This was also five years ago, I believe that the short sale/foreclosure process has been streamlined and goes faster these days. It was still enough to turn us off of them when looking for our current home this past spring/summer. We just didn't have the time to wait around for the bank this time, whereas at that point we were month-to-month in a rental, and our lives were just much more flexible.

[SusanBAnthony]

The reason I am open to them now is that we are in a month to month rental, and there is nothing much else on the market to make an offer on. So I figure as long as we are sitting around doing nothing, we might as well put a low offer in on the off chance it gets accepted.

I had never heard that the list price was the lowest the bank would accept. I wonder if that is regional?

[EloiseWeenie]

I think it mainly depends on the bank that owns the house. I know some smaller credit unions that don't get many foreclosures (because they outsource mortgages) will take any reasonable offer, especially if it's been sitting a long time.

[sjh722]

PP is right, the foreclosure-buying process is a lot more streamlined than it was 5 years ago. SS are still a nightmare.

Around here, it seems like the bank puts a price on it and most foreclosures sell within about 5-10K of that price, if not at or slighty over asking. If it's overpriced, they're more likely to drop the price every 2-4 weeks. I don't ever see them going for anything like 75-80% of list, though, so if it's way over your budget, I'd be surprised if the took a really low offer.

[boiler717]

Our lot was a foreclosure, so not exactly the same but similar. We completely low balled. The back had just dropped the price $40k and our bid was $50k below the new price. We only came up a couple of thousand.

[SusanBAnthony]

The house was a new build that sold for 350k ten years ago. It is now listed at 250k. Typical houses in the neighborhood are 200-225, some up to 250. So my feeling is that it was just too nice a house for the neighborhood, given the poor economy.

It also appears to be a split level, in an odd way. The front looks normal. The master bathroom is split into 2 levels- tub on one level, then walk down 5 steps to the vanity, lol. I am sure it isn't selling for that reason as well.

[bearkatjen]

Our foreclosure was listed at a fair price, but we asked for nearly 10% less, plus closing costs. We settled at 7% less than asking, with all but $400 of closing covered. We definitely got a good deal. The homes on our street are similar to ours and going for a lot more (we were well under the appraisal too), but we were the only bid on this house, and we jumped on it as soon as it came on the market. It took almost a month to settle on the price, and then another month to close. Our side was very quick and fast moving on everything, but the bank's side was slow as molasses. I'm not sure if it was the bank or the realtor that was slow.

We felt justified in pushing for a lower price and for closing costs, since you can't renegotiate after the inspection, and we wanted to make sure we were covered for any surprises that might come up.

[Deleted]

Can anyone explain the difference with a foreclosure that is listed as "auction"? Does this mean you don't negotiate with the bank but instead actually go to auction for it? And if so, it is usually only cash buyers that win at auctions?

What I see listed on Trulia website:

1) Foreclosure (Bank Owned)
2) Foreclosure (Auction)
3) Pre-foreclosure (Notice of default)

Can you purchase all three or is one of the above easier to negotiate and purchase?


Also, any FREE websites to search for foreclosures? The ones I have found want to charge something crazy like $48/month for membership and then other websites like Trulia don't give much info on the foreclosures...

[susieq]

Feb 6, 2013 2:02:55 GMT -5 @switzerland said:

Can anyone explain the difference with a foreclosure that is listed as "auction"? Does this mean you don't negotiate with the bank but instead actually go to auction for it? And if so, it is usually only cash buyers that win at auctions?

What I see listed on Trulia website:

1) Foreclosure (Bank Owned)
2) Foreclosure (Auction)
3) Pre-foreclosure (Notice of default)

Can you purchase all three or is one of the above easier to negotiate and purchase?


Also, any FREE websites to search for foreclosures? The ones I have found want to charge something crazy like $48/month for membership and then other websites like Trulia don't give much info on the foreclosures...

Most banks list their foreclosures on their websites but you really have to dig to find them.  Here is Bank of Americas.  Our neighbors house is supposed to be listed with them and I keep checking to see when it officially goes on sale.  You can also check HUDs website.

From my understanding you cannot buy a pre-foreclosure.  That just says the owners were notified that foreclosure proceedings were starting because they were in default.   

Here all foreclosures are initially auctioned off on the courthouse steps.  The starting bid is what is owed to the bank plus all fees associated with the foreclosure.  If no one bids it reverts to being bank owned and then you can purchase it when the bank decides to put it up for sale.  We have two foreclosures next to us.  The BoA property has been vacant for about 2 years and has still not gone up for sale. 
The other property was vacant for three years before HUD put it up for sale.  They wanted 215,000 when it went for auction.  It ended up selling for 83,000. 

[Deleted]

Susieq, thanks for the info! I wonder why the real estate websites would list a pre-forclosure if you cannot buy them yet?