Post # 1
So me and my SO are starting to talk about buying a house since it should be cheaper thenrenting. I started to look at different listing and prices and noticed that a house that been foreclosed on can be fairly cheap. I was wondering if anyone has any experience with buying a foreclosed house and some advice as to if it a path worth going down.
Post # 3
Foreclosed houses are tricky – they are sometimes harder to buy (the bank, and sometimes multiple banks, have to approve your purchase price and it can take months) and you will have to put a decent amount of work in them.
Generally, a house has been foreclosed on because the owners couldn’t pay their bills. You can assume everything of value has been taken from the house (applicances, and even sometimes the copper wiring!). If you go ahead with a foreclosure, you should get the best inspector you can find to do an inspection, and you may want to do a second. Just because the problems are identified though, doesn’t mean they’ll get repaired. You’ll just know what to expect.
If this is your first house, you may not want to consider a foreclosure. We looked at a short sale house before we bought (short sales are the step before foreclosure) and it was disgusting – moldy carpets, leaking pipes, and this pretty gross lingering smell – and that was just what we could see/smell/hear walking through the house.
Post # 4
@tynakinnon: Things can really vary based on where you are.
Post # 5
- Wedding: October 2011 - Bed & Breakfast
The foreclosures we saw were in bad condition. We’re talking houses immediately in need of a new roofs, windows, structural repairs, etc. You have to remember that when a house is foreclosed on, it’s because people can’t afford to pay the mortgage. That often means that they could not afford basic maintenance and upkeep on the house, too. So you are looking at homes that have been neglected for quite some time and have then sat empty for a long time.
For example, friends of ours bought a foreclosure. As a foreclosure all of the water to the house had been turned off for quite a while. Our friends had the bank turn the water back on for the inspection and it went fine. The deal closed, our friends moved in and had the water permanantly turned back on. After living in the house and using the plumbing for exactly 1 day, all of the pipes in the basement ruptured. Since the pipes had not been used for so long, they started wasting away, and after being in regular use again the pipes simply could not handle the workload anymore. So there were our friends with a new house and a huge bill to replace all of the pipes. They also encountered other fun surprises with critters moving into the attic for the winter, wiring problems lurking behind the walls, etc. It has not been the best experience for them.
On the otherhand, other friends of ours bought a foreclosed home that was in great structural condition. They needed to replace the deck because it was structurally unsound, and they needed to bring in all appliances, but otherwise it was all just cosmetics. Their big issue was that they wanted to use a VA loan and the house could not pass a VA inspection. So at the last minute they had to come up with a 5% downpayment so that they could get a conventional loan. That was not a fun surprise for them, but they raided their savings to make it work. Now they are very happy in their home and it’s been pretty smooth sailing.
So there are decent homes out there. It’s just that they may be harder to come by. And taking on a neglected home as a first time owner may be biting off more than you can chew. Even buying a well-maintained home will have some unpleasant surprises that you won’t figure out until you are living there. Being a homeowner is a costly adventure. Being a homeowner of a long-term neglected home can be even moreso. In the end, we decided to stop considering foreclosures. After closing we would only have about $30k left over in the bank. We didn’t feel like that would be a large enough cash reserve to take on the risk of buying a foreclosure.
Post # 6
@tynakinnon: I’m commenting FTP follow. My FI and I are looking to buy a foreclosure. It’s an excellent house in perfect condition. Just because its foreclosed does not mean the house is in shambles, everyone has different reasons to foreclose. I don’t know much about the process. I know the title was recently signed back to the bank and I’m waiting for our realtor to give us more informatioI. I hate waiting and not knowing what is going on
Post # 7
I bought a foreclosure! It was priced to sell and I jumped on the chance. As far as the condition of the house, everything that needed renovation was cosmetic. The structure of the house was pristine so we when we closed, I went it and cleaned the house top to bottom, repainted every inch of it and added new flooring in every room. The house was dirty because the last owners pretty much let it go since they knew that they were going to be foreclosed on but that just meant a better oppurtunity for me to make it what I wanted.
The actual experience of buying a foreclosure was very straightforward. A FORECLOSURE is not the same as a SHORT SALE, so be weary if you see anything that says Short Sale, they can take months to close.
Since I bought a foreclosure, I got the house for HALF of what the previous owners bought it and when I sell it, I will probably make about 60-70k just from the improvements that I made (and the market here is starting to creep up). It was great for me to buy knowing that when DH and I are ready to build our forever home, we will have some extra funds.
Post # 8
@tynakinnon: It really depends on the house. When my husband and I were looking at homes, we saw a really cute foreclosure, but when we got inside it was horrific. There was mold in between the window panes, the house smelled, etc. However, my BIL purchased a foreclosed home and the bank even did a few cosmetic repairs for them. That house was foreclosed on because the previous owner did not cooperate with the HOA. You have to take each foreclosure on a case by case basis, but definitely get a good inspector no matter what route you decide to go.
Post # 9
You should also realize that foreclosures are listed by the bank– and usually at a price well below what they expect to get for it. (ie: listing the house at 115k, but expecting multiple offers to drive up the price to 135k+)
We looked at a few but they were in such diar condition, that it wasnt worth even pursuing. Sometimes you can find a hidden gem and get it for a steal! just be prepared for the wait & work!
Post # 10
- Wedding: November 2013 - St. Augustine Beach, FL
@tynakinnon: My ex husband and I bought one. All of the appliances had been removed, the A/C needed to be replaced ASAP, duct work needed to be redone, and the carpets were ruined because the A/C had been off so long that they molded and smelled like the previous owners allowed their cats and dogs to urinate all over them. Once we paid for the house and repairs and appliances, we were stuck in the house. I QCD’d it to my ex when we got divorced so I could get out of it (thank God I wasn’t on the mortgage!)
You can get a good deal but make sure to hire a great inspector (or two) to go over the house with a fine toothed comb so you know exactly what you’re getting into.
Post # 11
We bought our house as a foreclosure almost 4 years ago. Ironically, the previous owner was actually a real estate agent, so I don’t know if that had anything to do with the condition of the house, but it was in excellent shape! The only appliance they took was the refrigerator, and all other appliances were working and practically brand new. They did take most of the light bulbs, which was strange. We repainted every room in the house and decided to replace the living room/hallway carpet with hardwood, although the carpet was still in great shape, we just didn’t like it.
The house was listed by a bank, but they were really fast and easy to work with. Because we were first time buyers with no contingencies, we were able to put in an offer, go through the inspection and close all within 30 days. I think we were some of the lucky ones through this process as I know this can usually take months. We did look at a few other foreclosures that were trashed and even for the price (listed close to market value), would have required more work and money than we were willing to put into. Try to stay calm and patient during the process. I thought buying a house would be fun, but after looking at around 40 houses (not all foreclosures), it gets overwhelming and frustrating. Good luck to you!!
Post # 12
My husband and I are in the process of buying a foreclosure right now. So far, everything is going smoothly. In our area, any foreclosures with Fannie Mac/Freddie Mac owned properties, they typically always re-paint and put down new floors (carpet mainly), which was a huge shock to me. It took about 4 days to hear back from the bank after we put an offer in. We just had the inspection this morning, and everything went well. The bank actually paid someone to come powerwash the house and deck (which it needed badly). This was a huge surprise to us! The only snag we hit is that we are first time home buyers and wanting an FHA loan so the bank that owns the house is being particular about paperwork.
We did look at one foreclosure where the basement was FULL of mold everywhere. Yuck. But the house we are trying to buy is actually a really good foreclosure.
I say it never hurts to look at foreclosures. Just go in with an open mind and realize there is always work to be done. And don’t forget you will more than likely need to have money up front to buy all appliances.
Post # 13
- Wedding: May 2013 - Pavilion overlooking golf course scenery, reception at banquet hall
We looked at a couple forclosures and they were in pretty gross shape. My realtor also warned that sometimes people who get foreclosed on get emotional and take the attitude of “If I can’t have it, nobody can!” and purposefully damage the house because, hey, they can technically do whatever they want to the house while its still in their possession. Realtor said she had just seen a house where someone drilled holes in all of the pipes under the sinks among other damages to make it a real headache for the mean bank and the new owners who “take” their house from them.
Post # 14
@tynakinnon: Depends on the area. Most of the forclosures around me are actually 2nd homes, vacation homes. They’re usually in great condition, sometimes newly redone! The trade-off is that they’re usually smaller, 2-3 bedroom ranches, and in the woods.
Post # 15
My fiancé and I bought a foreclosed house in April and our lease at our apartment wasn’t up until may 31 so we had some time to do repairs before actually living there. We had a TON to do, and still do, I but I think in the end it’s worth it. We just prioritized what needed to be done first- waterproof the basement, electricIan, plumber to do updates, painted the mastered and bath, and got carpets in the bedrooms. Then we have been continuing since with painting, floor, etc. it is tough when we both work and he also goes to school, but we do it in bits and pieces. We have run into some unexpected problems with the electric the inspector didn’t find, but you go with the flow. In the end we got a huge house for half price and even with all the costs now, will end up selling for a lot more. we wanted the challenge and wanted to learn about house stuff. A lot of professionals doing stuff but alot on our own too. Youd be surprised how much you can do if you try! Good luck!!
Post # 16
We bought a foreclosed home also. It was in pretty good shap structurally, but we had a lot of cosmetic work and had to buy all appliances. Some of the foreclosed homes we looked at cost more to fix up then what they wanted for the house.
One of things you have to consider is the type of loan that you are looking at. FHA rules are a lot different if you are using a conventional loan. So do check out if the house you are interested in qualifies for the FHA.