hurkemnl

Recently moved to state of Washington, looking to buy house soon. Anyone have any experience or good advice on buying a foreclosure or a house at auction, like what's the best way to go about it to get max $$ savings? Any downsides?

MsElui

my realtor keeps pushing this - as there are big bucks to be saved right now. However you cant always view the property in advance and sometimes the departing evictees wreck the insides in spite. You are taking your chances.

your realtor may be able to advise as sometimes they have shown people over properties for sale that have subsequently gone to auction (or be able to chat to their realtor mates who represented that property to tell you about condition and features etc). Look up the builder and model if its known to get a view of possible room layout and sizes. If you cant go view, try visiting the property anyway and looking in the windows. Look up the county valuers office and look at improvemnets or whatever done to that property and previous valuations. You can also try and work out at what point it was vacated if it shows the transfer of ownership to the bank - a property unlived in for a long time can have different problems!). If you go to auction have a selection of properties to bid on - so if the preferred one goes over your limit you can move onto others.

effi

The guys I work for do this. Just be aware that when you go to the auction that you will be bidding against people with deep pockets. I do not know how they do it there but here in AZ they do it on the courthouse steps and you need to have all your ducks in a row before you get into it. You will be bidding against companies who are looking to make a quick profit, they have mucho $$$ to spend. Like the other poster said, you may not be able to see the property, so be prepared to end up with something less than you hoped for.

penguinsix

Often the foreclosures are in a distressed state, or even in a distressed location. As a general rule, you should be asking 'why was their a foreclosure?" Was a person having problems or declining property values in that specific area (and what was the reason for that).

The deep pocket guys bidding have done their homework. They've seen the property (and dozens like it) and can usually estimate exactly how much in contracting, plumbing, zoning, etc will be needed to turn a profit on the house, and how much they are willing to spend to make xx%.

Good luck.

Tarkak9

How big is a ball of string? My attitude twds bank owned etc properties are that they are a hidden liability until proven otherwise. Are all foreclosed properties a bargain? Not always. Can you get a steal? Sometimes. Never assume anything and know your limits. Overall, do your homework. review comps to see potential value; study the trend of the area/n'hood too. If you have a particular property in mind... find out the sale date so you know how much time you have to do your due diligence - (you can find that out at the public trustee's office). Definitely verify that the bank owns it and nothing else is recorded on it. Find out the amount(s) owed - that will give you an idea what the bank is hoping for (not always what they will get!) Banks are there to make money, not necessarily lose it - they are a 'for profit' entity; besides, they are trying to recoup their losses (inc attny fees) - they want someone else to pay for their mistakes per se.

'Background checks' on a property you can also do is to go to law enforcement with address in hand, has L.E. ever been called there; has a crime ever occurred there.. e.g. meth lab, drug activity etc. sex offender in the area?
Building dept - what permits have been pulled? gives insight, no guarantees - e.g roof been done with permit (may not be a requirement but it could affect your insurance policy etc)
Insurance C.L.U.E. report... what claims if any have been done on the property - again, not to say nothing major occurred to the property, just no claim was submitted.

Always remember that a bank owned property.. what once was someone's problem now has become your problem!!

If you can see the properties ahead of time, do so.. I wouldn't ever buy anything sight unseen per se. At the sale date/auction there will be many with big pockets but that's not to say that you can't jump in even if you have to finance the purchase. Highest bid wins per se and cash is king.

If you are successful, know your outages in the contract. What's their stance on inspection & can you back out? Most will but always check. Title insurance and what type of deed are you getting (know exactly what you are getting).

The biggest 'downside' as you say is that you are typically buying the property 'as-is' - what you see is what you get with all faults and current condition. If you buy a foreclosed property, check the plumbing as much as possible - especially have the sewer line scoped. Whomever is reading this post, it is the most overlooked thing people do!! If you have a broken sewer line.... can be an utter nightmare to replace and $$$ to do so. I have heard stories of people pouring cement down the drains - not kidding.

Another avenue to explore is a Short-Sale scenario.. which is a troubled property headed to foreclosure whereupon the goal is to get the bank to agree to accept less to what is owed on the property. You need to involve the current owner, the bank & yourself etc. basically you are trying to obtain the property prior to auction etc.

Hope this sheds light for you and ask if you have questions!

Good luck!

BritGuyTN

depends on the type of foreclosure

I'm in the process of closing on a duplex in foreclosure that did not sell at auction, had the price reduced and was listed on the MLS

same with the actual house i live in

buying in the courthouse steps requires capital, often 20% earnest money and closing in 1 week

Buying on courthouse steps often means paying the auction price + any accrued past property taxes

buying off the MLS means that potentially its less of a good deal

I personally would not buy a foreclosure unless I knew the property in good detail and knew the area very well

Also, if you are new to the area you may not have good contacts established yet for contractors which you may need for needed repairs

example

duplex i am buying has all the copper water supply lines stripped

general quaote for replacing both units - $3200

my plumber - $1200

my homes HVAC System replacement -

general quote - $8000

my hvac guy - $5000 (very expensive dual fuel electric hreat pump with natural gas back up)

bottom line

foreclosures can be good

but

they can bite you in the ass if not prepared or under-researched (pretty much like anything in america )

cpltony

tarkak9 gives great advise.

Other ideas are to find someone in your area who has done this for a while and ask if you can shadow them. Learn everything you can and take notes on everything they say. I'd be wary of anyone who will benefit from you doing this giving you advise.

Money can be made, but it can also be lost.
Go in with your eyes wide open and don't put all your eggs in one basket.

lapin_windstar

Cast ne'er a clout till May be out, a stitch in time saves nine, and watch out for the straw that breaks the camel's back.

chicagojlo

Don't forget also that the guys with the deep pockets are likely paying less to get any necessary repairs done which is why they can go higher on the purchase price. It doesn't mean the property is worth more.

hurkemnl

Thanks all who replied. It is not an uncomplicated process we have realised!

Thydney

You could always try short sales some here are going for 1/2 what they did 2 years ago