First Foreclosure Purchase
I'm plannning on bidding on a property at a sheriff's sale. This will be my first investment property and I plan on cleaning it up, making some repairs and reselling it. Other than doing a title search are their other things that I should do or check before bidding? I have driven by the property but of course can't get inside to check it out. Also, I would like to do this again as I find houses I'm interested in. Do most people hire the title searches done or is there somewhere you can get a checklist of the things you should check for each prooperty so you can do them yourself? Thanks for your help!
Ready for a rollercoaster ride?
I've read that bidding on and acquiring a property at a Sheriff's Sale auction is the most risky introduction to real estate investment... and I agree with that.
In my opinion, the risks outweigh the benefits... until you learn to identify the potential problems and learn how to avoid
the inherent risks including condition, title, hostile tenants, insurability, right of redemption, etc.
Sheriff's Sale acquisition can be rewarding, but it should be considered as one of many techniques to acquire real estate.
Risk averse? Try REO or muni tax lien investment.
there might be a checklist for doing a title search somewhere out there but i found out the best way to do it is to go down to the local clerk and recorder's office and dig in. pull information on you your house or someone you know so you know what to expect in your search and can ask that person (if you know them well) what some of your findings mean. also feel free to ask the staff at the office, they are probably overworked but i've found out that they are quite knowledgeable and are willing to answer questions to the best of their ability.
Thanks, very helpful answers! I am nervous about buying without being able to see inside the property and also not having any previous experience. The reason I'm considering foreclosure as my firt step is I ran across a property that the foreclosure debt is $50k less than the assesed value. The house looks decent, but a little run down on the exterior. I assume the same on the interior. It looks like the same woman has lived there for the past 10 years or so. It looks like something I just cant pass up if it goes for the foreclosure debt at the sale.
There may be a superior lien to the one that is foreclosing..... so in this case, a preliminary step would be to locate the Deed which will direct you to any Mortgages. The Mortgage document will indicate if it is subject to a foreclosure action. The terminology might be different in your state.
Thanks, I'll be sure to check that out. If I have a title search done will all that information be included in that?
Hi,
There is a lot of research on buying court house step homes. You have been given just a few of the problems.
You should consider a less involved type of real estate to purchase.
Look for estate, motivated rental property owner ( not everybody has the capabilities to buy, maintain and manage properties) and REO's.
Find a local mentor who may share with you some of their experiences.
[B]DON'T JUMP IN WITHOUT MORE RESEARCH ON THIS TYPE OF PROPERTY IN YOUR STATE
Good luck in your first venture. If it does not live up to the expectations, don't give up. Every purchase I have made, has a different set of problems and solutions.
Best of luck. Let us know how you came out.
Chuck
Thanks for the good advice. I guess I've been reading books on doing this for so long that I figured the only way to really learn is to just dive in and do it. I have looked for a duplex to start with but haven't had any luck finding one in my price range and with a decent rental history. I've read that these foreclosures are risky and should be left for the more experienced. I guess the books don't get into enough detail, other than the obvious. I'm not sure what other risk's there are other than the lien's and property condition?
I've been researching and considering purchasing post-sheriff's sale foreclosures myself. In terms of getting a look inside, perhaps just knock on the door and be honest about your intentions; the owner knows the house is about to be lost (or may have already fixed the problem!), and may be open to your looking at it and/or taking even a token amount, possibly to buy out the equity that's there, since the bank is offering nothing. They might jump at the chance to get a few bucks on the way out the door. If there's a redemption period, you might offer them a few $$ (or a longer period to have to move out) for their "right of redemption" after the Sheriff's sale, in part by reminding them that the (cold-hearted?) bank will make no such concession. Probably a safe presumption. I agree that this looks risky, but it also offers some great opportunities.
Hi,
I would take the chance if I could get the
property dirt cheap. (few 1000's)