(Closed) Has anyone ever bought a foreclosure?

posted 6 years ago in Home
Post # 3
2106 posts
Buzzing bee
  • Wedding: September 2012

We were looking at a few forclosures/bank owned properties that had been short sales that just didn’t sell.  A few of the houses looked great until you scratched the surface.  Termite damage, mold, neglected home maintenance, and previous owner sabotage caused us to walk away from a few properties.  Remember that, for a home to go into forclosure, an owner has not been making mortgage payments, which means there’s a pretty good chance they didn’t have the money to fix the drainage problem in the basement causing a leak, or the faulty sprinkler, and so on.  Then again, we saw the same problems with short sales, just less bad as the foreclosures since the owners were in a bad place for a lot longer. 

We toured one or two properties a few times over the course of a month and saw the owners had done bad things to the house from the time we first saw the houses to the last time we saw the houses.  Example: One house had a gorgeous low-maintenance deck in immaculate condition, just a bit covered by leaves.  When we re-visited the property, (which was a short sale.. so.. 2 steps before foreclosure) the owner had clearly stopped caring and had burned a hole in the deck improperly using his grill. 

If you go after a foreclosure, the property will be as-is.  Get the best home inspector you can afford and then consider all of the repair costs when making your offer.  If the house appraises at $300,000 but there are over $50,000 in damage that must be fixed, don’t offer more than $250,000.  There were/are several foreclosures in the neighborhood that went to shortsale and then foreclosure when the bubble burst.  We bid on 2.  We were actually outbid and one went for way more than list.  The other went for way less than list. You just never know. 

Good luck!

Post # 4
1425 posts
Bumble bee
  • Wedding: March 2013

I may have an odd viewpoint on this. We lost our house to foreclosure two-years-ago and I can tell you the house was falling a part. We knew we were losing it and didn’t put money into it to fix it. Plus, with two disabled parents, money was going elsewhere. So, as a former resident of a foreclosed house, it would be a *major* fixer-upper. Our bank bought it back from an auction for $58,000 and then relisted it for $102,000, in a neighborhood where the average house is selling for $70,000. And they were selling it as is (washer/dryer didn’t work, kitchen appliances over 15 years old, etc.). Now they are trying to rent it for $1,200 a month, still as is (so a renter would need to repaint, fix tiles/grout, leaks, etc.).

My point: I think it’ll be hard to find a keeper that doesn’t require a lot of fixing money put into it. In my area, foreclosed homes go for nearly as much (if not more) than “regular” homes for sale.

Post # 5
328 posts
Helper bee
  • Wedding: August 2012

I bought our house on foreclosure. The house was only on the market about a week when we made an offer. We lost out at first to someone who bid several thousand over the asking price, but they backed out so the bank accepted our offer!

I will be honest and say it was not an easy process. We offered $500 over asking price. The house required A LOT of work. The former owners took everything that wasn’t nailed down (appliances, knobs off cabinets, mirrors, light fixtures, etc) and there was a pipe that had leaked so areas of dry wall were missing and there was no flooring in some rooms (though thankfully the bank had repaired the pipes so we didn’t have to do any plumbing and there was no mold!). Still, we had to put in a lot of time and money and spent around $15,000 in repairs and replacing things that were taken. If we hadn’t been able to do many of the repairs ourselves, we would likely have spent $30,000 fixing the place up, which would have made the cost right around fair market value. So definitely take that into consideration.


We also had many issues with the bank. Due to the missing flooring and appliances, they deemed the house “unliveable” and didn’t want to give us the loan. They wanted us to put in new carpeting and a stove to give us the loan. And they came up with this theory just a couple weeks before our closing date and I had already given notice that I wasn’t going to renew my lease on my apartment. There was no way I was going to put money into something I didn’t own, and I had to fight tooth and nail to get the loan even though I had a 20% down payment and excellent credit due to the condition of the house. I went as far as emailing the VP of Mortgage Service, President, VP, and Mortgage Manager at Sovereign Bank about the situation they put me in. By working with the Chief executives, we were able to work out that I would escrow the money for these repairs so they had their assurance that I would in fact repair the home and live there, and I didn’t have to put money into somethign I didn’t own yet.

At the end of the day, we got a nice place far below market value and because we did a lot ourselves, will walk away with a small profit when we go to sell, which considering this economy is amazing! But it was definitely a lot of leg work and not for the faint of heart. The process was much faster than a short sale.

Post # 6
1611 posts
Bumble bee
  • Wedding: June 2012

I would be willing to purchase a foreclosure, but it would have to be way below market in order for me to do that because I know going into it that it will need a lot of repairs. I would acutally prefer to buy a house that is way under market that needs work though.  I don’t know if I would buy a house that is move in ready.

Post # 7
39 posts
  • Wedding: April 2012

I got really lucky and am married to a realtor.
In December he found a dream house for us — and it was a Foreclosure, owned by HUD the federal govt agency. The people who lost it still owed 239,000.
It got mistakenly listed for just 80,000.

The first week it was only open to non-profit agencies. But nobody put a bid on it, yay!

The second week it went open to owner-occupants, (ME!!) I decided to over-bid, which I know is rare but I did it just to ensure I got it. I put a bid of 86,000.

Well i got out-bid, apparently by several people. BUT thank goodness, all those other people who bid more than me somehow fell through!! The financing didn’t work out, or something..I’m not sure. But finally the house trickled back down to me.

We lost it though b/c we used black ink instead of blue ink (WTF?) so my then-FI *(now husband) had to drive a 8 hour round trip to the HUD office in Atlanta and re-do the paperwork in blue ink.

So the process was a stressful, tearful nightmare, but in the end it all worked out!!

For 86,000 we got a house worth close to 250. The houses nearby sell from anywhere to the 200s to low 400s. We are so blessed and happy with our find!
AND even though it sat there 2 years empty, all the appliances still work and are in great condition!! Literally the only thing that was missing was the oven racks, lol.

I recommend it! It definitely helped that my realtor was my fiancee and willing to go the extra mile for me though, lol.

Post # 9
641 posts
Busy bee
  • Wedding: October 2012

I apologize in advance for the length of this response. Personally, I would never buy a forclosed property, as my family lost our home to foreclosure in 2008 during my senior year of high school. It is something I will never fully lose my bitterness over. My parents tried so hard to save our house, which was the same home my father and grandfather grew-up in as well, but no one was willing to help a family of five with three children (ages 18, 14, and 5). Often, foreclosures are the result of poor financial decisions, which was not the case with my family. Early in my parents’ marriage, they had money issues, which they had gotten under control a few years before the foreclosure. Unfortunately, my Dad, who (then) owned his own masonry business, teamed up with a contractor to do some work. That contractor failed to pay the final $8,000 owed to my Dad for his labor, and then suddenly moved, supposedly to Florida from New Jersey, where we had resided. We never saw that money, which was to be our main source of income for a few months, or the contractor ever again. My family kept up with the mortgage payments for four months until things began to fall behind and eventually crumble. Our house slipped into foreclosure, and my parents did all they could to post-pone the sale, and succeed to do so from August 2007 to January of 2008. Our house was sold back to the bank in January, and we were evicted in March of 2008, with two and a half months of school left. My last day in my home was spent moving all of my belongings into a storage container on my grandparents property, directly next to where we lived. My memories of the eviction remain so vivid. I sat from my bedroom window, watching the officers from the sheriff’s department, people from GMAC, and a moving van park down the street, and then crowd into my driveway at 10AM. My Mom and youngest brother went to my grandparents’ house next-door, my other brother sat sobbing in my grandparents car, and my Dad had to convince me to leave my room. Later that day, my youngest brother, not understanding what had happened, asked “Can we go home now?” The whole ordeal was just utterly painful.

I will not tell a lie; the house, while not destroyed, was not left in the most desirable condition. I, personally, wrote on my bedroom door and walls before leaving, but that was the extent of physical damage, mind-you it was an old farmhouse, and needed a few repairs that we just couldn’t afford during our last year and a half in our home. After the eviction, I made a personal vow to never buy a forclosed property. To me, every foreclosed house had a story, a family that loved it, a family that never intended to leave it, but was forced to. Whether that was the case or not, that’s how I felt. I just couldn’t find it within myself to find happiness from a situation that caused pain to others. So, for me, buying such a property is not even an option, but with that said, I do whole-heartedly believe that life goes on, and it is better for the house to be loved than left to waste. I have no problem with anyone else having the desire to buy a forclosed home, I just could never be the person to bring it back to life.

Post # 10
1659 posts
Bumble bee
  • Wedding: July 2012

We did! Perfect location and awesome yard – the interior was outdated and not cared for, but had an awesome floor plan and so much potential. We paid list price with seller paid closing costs (chose that over $10k below with us paying closing costs) and did a 203k loan to fix up he house. The 203k added about $30k, but even with that, what we’re paying is still $50k under what the house is assessed at and about $70k below comps.

Post # 11
121 posts
Blushing bee
  • Wedding: March 2013

I bought a foreclosed condo 3 years ago. It had just dropped about 20% in price, so I offered list price but asked them to pay closing costs. I was anticipating competing offers.

My experience was just fine. It took a bit to hear back from the bank on the offer, since they aren’t individual sellers, but once the ball got rolling it was fine. I used an attorney in addition to my realtor and it was well worth it. An attorney that you’re paying a flat fee is the person that truly has your best interests in mind.

There were some things that weren’t well documented that I needed to get in writing since it was a foreclosure, like it came with 2 deeded parking spots (unusual – most in the building only have 1), so I needed to get that clearly documented.

It was a great experience and a great deal. I’m glad I went forward with it. It obviously isn’t as risky as a home that has been sitting empty (still had heat/water/etc since it was in a condo building and the association was maintaining the outside).

Post # 12
2603 posts
Sugar bee
  • Wedding: October 2010

We bought a bank-owned property (so not a foreclosure, technically). There’s a lot of nuance to it, but one thing I can tell you is to get a good realtor.

The other thing that might affect you are the laws in your state and the relative protections for buyers versus sellers. I live in CA, where the protections are pretty robust–you can make an offer and then pretty much walk away for any reason within the first 14 days (that’s the standard time limit; it can be negotiated up or down by the parties) without penalty. The reason why this is pertinent is because let’s say that you put your offer down and then the inspection comes back with something you don’t like (which often happens with bank-owned properties, as the bank didn’t live in the house so legally, they’re not expected to know or disclose things that a homeowner would). If you’re within the 14 days, you can walk away–even if its’ something minor (in CA, you literally can say, “I just don’t have a good feeling about it”). But in other states, you might have to prove something drastic, OR you don’t even have that luxury and will pay a penalty for withdrawing from your offer. It might sound small, like 2% of the offering, but when we’re talking about hundreds of thousands of dollars, that’s not peanuts.

The other thing is, if you work with a bank, it’s pretty much they say jump and you say how high. Expect situations in whcih they say, “We need this 20-page form filled out by 5PM TODAY” and then not hearing from them for like, 2 weeks before they tell you they need something else within hours. As our realtor put it, “Banks don’t play by the rules.”

The trade-off is, you can find some great properties out there.

Post # 13
1471 posts
Bumble bee
  • Wedding: August 2011

We bought a foreclosed home. The bank did a ton of work on the house after it went on the market (upwards of 10,000 dollars), and we got a list of the repairs they had done. Everything was/is fabulous (other than the painting over borders/wallpapers, but a day or two of work took care of that).

On the other hand, we did have a plumbing issue right after we moved in that they couldn’t have known about before-hand, so it’s not their responsibility. With a real owner, you can sometimes go back and request that they pay for something like that, and obviously we didn’t have that option. So that sucked, but it wasn’t really their “fault,” just bad timing. Otherwise, everything went smoothly. But we were really interested in the home inspector’s report (and the appraisal), and were not sold on the property until we heard from them. We actually got a brand-new roof from the bank after the home inspector checked it out and said it was from when the house was originally built–in 1978. Our appraiser priced the house right at the sale price, so in order to sell it to us, they had to fix the roof–and they did!

Post # 14
887 posts
Busy bee
  • Wedding: March 2010

We’ve bought three “as-is” foreclosures and put in offers on at least 8 foreclosures that we haven’t gotten. Private banks, Fannie Mae/Freddie Mac, HUD homes…all of them! The ones we actually purchased we paid below list price. Some of the ones that we offered on and didn’t get, we offered 10k+ over asking price. All of our offers have been cash with no inspections.

It really can be a tough process. We’ve gotten within days of closing on a house when the bank “realizes” it doesn’t have the right to sell the property. We’ve had closing get delayed an entire month, because the bank didn’t have all of it’s paperwork together and we were practically homeless. Not all foreclosures are good deals. The foreclosures that we’ve purchased have had very angry previous owners who have stripped out light fixtures, peed all over carpets, frozen the pipes, hid dead animals in the walls, etc. It all depends on what you want.

We’ll continue to buy foreclosures in the future– we like to remodel homes and doing it completely ourselves can turn a decent profit. It really depends on your area, the house, and what you want out of a home buying experience.

OP, do you have a specific house in mind? Do you know whether a bank owns it or the federal government? Is it “as-is” or do they have a repair escrow set up (HUD homes do this sometimes)?

Post # 15
540 posts
Busy bee
  • Wedding: April 2012

we were thinking about it, but they’re short sales and the process is long and not guaranteed that you’ll get it.

Post # 16
955 posts
Busy bee
  • Wedding: April 2011

We bought one 3  years ago. We saw plenty of forclosures that were trashed but ours was perfect besides paint. It was flipped during the boom and they defaulted on 230K we got it for 75K which was list. I think you just have to do your homework and make sure you know what you are getting, but I think that is with any house you want to purchase. Good luck!

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