Dud3s

I have a couple of friends that ventured into this area. They always dealt with the homeowner directly prior to the foreclosure becoming final than waiting until it's a REO (in the bank's inventory). Of course there is caution to be taken going that route but it might be something you might want to consider because they ended up getting a better deal. The home owner avoided having the foreclosure on their record (easier to start over) and my friends received a good deal (and a fair price, they didn't take advantage of someone in distress). It was a win/win for both parties.

Thanks Tyme,

Well, if the bank owns the home and the house is empty or has been empty for some time...I guess you wouldn't be taking advantage of someone in distress.

I could never feel comfortable jumping on a "great price" all while someone is still in the home and might be struggling. That is almost evil.

Well, from what my friends told me it didn't work out the way one would think (the homeowners being distressed about having to leave). As an example, I was told one of the families could not afford the make the payments on the home and could not sell the home, so it went into foreclosure. They were concerned about where they were going to go, what they were going to do, etc. Let's say (after the home was inspected) the mortgage balance was 50K, the home was worth 150K, my friend paid 90-100K (throwing numbers out there but I think you get the gist of it). The balance on the mortgage was paid, the family had money to move on, my friend got a good deal on the home, the foreclosure never went through so the original owner's credit was clean for a fresh start in that regard. The key perhaps was not trying to lowball at 50K.

I am not sure if this type of situation is the norm but it worked for my friends. Technically, the original owners were pretty well set to purchase another home if their credit wasn't too damaged from the financial problems. :)

Ah, I see...thanks for clarifying.

The word "foreclosure" always sounds nasty and always feels like you are buying someone from a used car dealer...just never sure what you are going to get.

Someone recently told me if you buy a foreclosed home (one that has officially been in a foreclosed state unlike your friends), to plan on having money on the side to invest in fixing it up as if people can't afford the house payments...they probably won't spend much time keeping the house nice.

A couple foreclosed search sites out there had a home in my area market value of $190,000, Repos value of $98,000...I was like WTF...thinking something must be wrong there...but someone pointing out that the bank just wants to literally get that house off their hands...then again could have been a murder in the home for all I know.

Another one, though, was the opposite. The market value was $190,000, and the REPOS value was $230,000...so that had me scratching my head.

I've bought two both with my brother, we did use a real estate agent to represent for the title search and we use a real estate lawyer as well etc. The first was done with no money we bought the house had permission to work on the house for sixty days prior to settlement and to market it and sell it, we bought it as above to save the people from actually having a foreclosure on their record, it was one of several homes they owned, we sold it and settled to purchase on the same day.

We just did one last fall in which the bank had foreclosed and the people were long gone, the bank however was desperate to get rid of it having many foreclosed long gone mortgages.

Both homes needed a lot of work.

You might be better off calling around, some real estate people can and will help you with this as would a real estate lawyer. We use both. I'm actually getting ready to do one without my brother but I think the first couple times finding a real estate lawyer, at the very least, is best.

I would think now would be a good time to get on it.

I'm assuming in the last scenario where the repo was higher the lender was trying to get what they think the property is worth as opposed to the market value via real estate or tax estimates because possibly they lent the money based on an overestimated value.

Thanks Cooper.

Yea, that is my fear as I am not a huge handy man...so most foreclosed homes are left in disarray so they require quite a bit of work.