Buying Your Own Primary Residence Foreclosure
Hi.
I'm thinking about buying a foreclosed home and rehabbing it. I think this would cost much less than buying a home the traditional way thru a broker or the classified ads.
Has anyone bought their own home via foreclosure? Is this a good idea? What steps have you taken to make this happen? What should I look out for?
Thanks.
Why not??? Anytime you can buy a property, which you are going to make your primary residence, for less than Fair Market Value is a good deal! Just make sure you do your due dilligence in researching any outstanding liens, judgements and any other gotchas. I am thinking of moving soon and am definately keeping this as an option for myself as I am already investing in pre-foreclosures. The fact that you won't be paying capital gains on this since you will be keeping it as your primary residence is an added bonus!
Ed
FearofREInvesting,
Yes, you can make money buying a property in foreclosure, if you know what you are doing, if you don't, you could actually loose. Your questions indicated that you need to learn a lot more, before venturing into foreclosure arena. There is not a simple answer to your questions, people spend months or even years learning.
Reinatalie,
My question was about buying my OWN primary residence via foreclosure, not as an investment as yet.
Have you done this?
Thanks MarleyLiv. I'm learning as much as I can about foreclosure.
Can you recommend the cheapest home study course about foreclosure?
Foreclosure fishing is a lot of work in most markets. And even where it isn't it can be complicated. To gear up the knowledge and the time to do it to chase one house to live in may be more trouble than it is worth.
Foreclosure fishing is largely about chasing numbers, dozens of foreclosures to find one seller who will talk to you. Dozens of sellers to find one who has equity in the house. If you add in dozens of those to find a house you are actually willing to live in you've got a lot of work involved looking for a bargain.
That said I'm not saying it cannot be done. A lot depends on your local market and how many other people are chasing the foreclosure lists.
I agree with everything commercialking mentioned regarding ramping up your knowledge of buying foreclosures, even as a primary residence. Not really knowing the timeframe involved in your primary residence search, this might be difficult.
As far as taking a course, believe it or not, I have done my learning through reading many books, local laws, joining the local REI association and talking to many folks in the business. This is what has worked for me to feel comfortable to go out there and invest the 'right' way. Others need a more structured way of learning through courses (especially if they are interested in a particular way of investing such as sub2). All depends on the individual. Take care and good luck.
instead you might want to find a wholesaler to get a below market value house, you can find some of them here....
than you can look at the house and choose
The problem here is the term "foreclosure."
What CK is speaking of has been labeled "pre-foreclosure" or where the owner of the home has been slapped with a foreclosure notice and is trying to get rid of the house.
From your post, however, what I believe that you are referring to is called a REO (Real Estate Owned). This is where the bank has already foreclosed on the propert and has become the owner.
If you are thinking of buying a REO, then you will need a real estate agent as 99% of all REOs are now listed on the MLS, and the bank/lenders will not talk with you directly.
Foreclosures aren't automatically "deals" just because they're REOs. Sometimes they are greatly overpriced for their condition. In order to get a deal, you have to be very aware of the current market conditions and of your abilities to fixup the place or have it fixed up. Otherwise, it could end up costing you more than it would if you'd have bought a similiar home on the open market.
Roger
I agree with Roger. I think he is talking about REO's too.
I bought a REO as my primary three years ago. It was a good deal, but not a great one. We got $7000 off the as is appraisal value, $2000 in closing cost, and $6000 in repairs from Bank One. It was in a kind of rough shape, so we had to spend almost $10,000 to bring up to move in condition. Then we spent total of $12,000 to update the prop in last two years. We are probalby spending $10,000 more to update the kitchen and bathrooms and paint inside of the house before selling this property in three years. We just fell in love with the house, so we had to have it. The property is 3500 sqft with 1600 sqft finished basement. Now the property is worth about $43,000 more than what we paid, but I am not anticipating the value of this house to go up much more than that though.
We bought another REO as our 2nd home a year ago. It was a pretty good deal, I think. We paid $30,000 off the as is appraisal value, spent aoubt $25,000 rehabing the property. Now this house is worth about $70,000 more than the purchase price.
According to real estate agents, banks are getting tougher to negotiate. As a mortgage borker, we deal with customer who are buying REO's. It seems like the banks don't want to give the home buyers anything lately. The biggest key is length of listing. The longer the property is listed, more antsy the banks get to give your a better deal.