How-to Monday: Finding foreclosures
Associated Press photo
The more you hear about foreclosures piling up, the more you may be tempted to buy one. There's a lot to consider if you do -- but first things first: how to find them.
A foreclosure becomes a foreclosure when the home goes to auction. Frequently, the buyer is the lender -- that's what happens when there's no one else willing to bid at least as much as the lender wants. If you think there's a deal to be had, you can be that bidder.
You'll find ads for impending auctions in the newspapers. Or you can see listings online. Alex Cooper Auctioneers, for instance, keeps a tally of scheduled foreclosure auctions -- typically on courthouse steps. Express Real Estate Auction Services has foreclosure auctions listed as well, as does Tidewater Auctions. Harvey West Auctioneers doesn't separate its foreclosure listings from its regular auctions, but you can see the full list HERE.
Then there are companies you can pay for pre-foreclosure and foreclosure information, such as ForeclosureS.com and RealtyTrac. (Paul R. Cooper, a vice president with Alex Cooper, pooh-poohs the idea of paying. If you're willing to do your own homework, "all the information's free," he said.)
Remember: You have to come prepared to make an immediate deposit if you're going to bid at an auction. Alex Cooper expects cash, a cashier's check or a certified check.
If auctions worry you, there's another option: Buy from the bank afterward.
Some lenders keep a list of their post-auction properties -- known as "Real Estate Owned," or REO -- on their websites. Those with lists include Bank of America, Chase Mortgage, Fannie Mae, Freddie Mac and the U.S. Department of Housing and Urban Development (which oversees FHA-insured loans).
Or ask a real estate agent. Realtors often market foreclosed properties for lenders, so they'll be listed for sale. (Agents can, if they choose, note on Metropolitan Regional Information Systems' multiple listing service whether a property is a foreclosure.) You can look for agents who take a lot of foreclosure listings or those who work with a lot of buyers interested in foreclosures.
A note of caution before you rush off to buy: While a foreclosed home could be a great value, seasoned real estate investors say there's no guarantee. The asking price or starting bid could be more than the house is really worth, particularly if the previous owner started with a small down payment. Or the house might need more repair work than you can afford.
That's where research and due diligence come in. You might, for instance, start by looking up the property's assessment record -- click on "property sales" to see recent sales prices elsewhere on the same street -- and by checking out the loan history.
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Comments
So many people are going crazy recently about the properties on foreclosure. It`s becoming more widespread in Canada and as I`m working for a Toronto real estate company I know that the number will rise which is not a positive sign regarding the market. The property which goes to foreclosure always lose from its value which is a great disadvantage for those who may want to sell it in the future.
Posted by: Toronto real estate agent | June 23, 2008 4:45 AM
I wonder how many of these properties ever made it to a tax deed sale? I believe the redemption period is six months in most cases but can be as short as 60 days. If defaults on mortgages are increasing as is the case in most states, then some great bargains could be found.
Posted by: Treasure Hunter | July 26, 2010 8:47 AM
If you want to invest in property then buying a foreclosed property can be a good place to start, but you need to follow some basic rules to avoid losing money. The first step is to find foreclosures and then do some homework on the foreclosed property and research the local property market too. Research can make or break the fortune to be made on a foreclosed property. The important thing is to know the true market value of the foreclosed property and NOT over bidding on the foreclosed property.
Find foreclosures and then know the value and fix up costs of the foreclosed property under the hammer and don't over bid.
Posted by: Bill The Real Estate Guy | July 27, 2010 9:36 PM
Thanks for this info, Jamie. I am a newbie to real estate (I live in Utah) and beginning to study the market. Don't want to make too many mistakes.
Posted by: Real Estate Newbie | July 28, 2010 1:30 AM
Fantastic article about foreclosure properties and what a topic of discussion these days.
The bleak outlook on the near future is for us Realtors we will be seeing many more REO (real estate owned) properties come into our Multiple Listing Services which is going to really stress the market values of communities around the nation.
A very good rule of thumb if you happen to be in a situation where you are able to purchase or are thinking about purchasing a foreclosed property is this:
If you can take the chance and let the house go up for sheriff sale and not be too disappointed if the house indeed gets sold at auction, wait.
As this article mentioned, the sheriff sale process, also known as going to auction is a bit tricky, and usually only cash is allowed as well as many times you can only see the outside of the home, no inside inspections and you would definitely not have enough time to get a professional inspector out there.
It is basically, what you see is what you get and waiting to see if the house sells at auction would be a good route to take because if the bank takes possession of the home and it turns in to an REO property, the house will go on the market with a real estate agency hired by the bank to market it for them.
NOW you can get into the house and bring your inspector with you to save some time if you are really hot for the home, but at least this way you have a chance to get into the house and see more of a full picture.
The asking price will usually be below fair market value so just be sure to have your calculator in hand and know a thing or two about repair costs so you know up front if the house is a good investment or not.
Posted by: Amy Sites | August 12, 2010 5:13 PM