- This topic has 5 replies, 4 voices, and was last updated 18 years, 3 months ago by jawbone_shack.
-
AuthorPosts
-
July 11, 2006 at 2:45 PM #6851July 12, 2006 at 6:45 AM #28165powaysellerParticipant
I have not bought them, but have been warned often to stay away. We asked our landlord, who owns many SD rental properties and started his career with buying foreclosures here in the 90’s, and he said, “Foreclosures are nothing”. The price is too high now. Buyers bid them up, thinking they are getting a good deal.
Now, foreclosures might start off at 10% below market value, and are bid up to market value.
Privatebanker had a post a while back, where he described REOs going for 20 cents on the dollar. There will be a time you can buy foreclosures at 50% off. In a few years.
Foreclosures don’t allow you to do a home inspection. Would you catch the IRS liens? Can you do a title search? Preview and inspect the house? I’m not sure.
With the big RE boom came many books advocating foreclosures, crowding out the market. Some years back, a handful of investors came to auctions, and now you’ve got hundreds of people. This demand pushes up the price.
Wait until banks own hundreds of properties and are willing to discount them heavily, as in the 90’s.
July 12, 2006 at 3:04 PM #28202mrquoiParticipantForclosure buying is for people with a lot of $. (At least relative to the price of the property.) I’m not sure what the latest rules are, but I think you have to pay all cash at the auction and you are not allowed to do an inspection. So you could wind up getting whacked with huge repair bills since most foreclosures have had people living there that did not bother to keep up the property at best and destroyed it at worst.
July 13, 2006 at 8:12 AM #28233powaysellerParticipantThat is my impression too. I was told thought that the homes are open for 2 hours for a walkthrough, prior to auction. You need cash or 20% cash at the auction. Can you get a bank loan for $300K, to have on hand at the auction? Or would a bank not give that type of loan?
July 13, 2006 at 10:35 AM #28246Jim BrubakerParticipantForclosure sales are not the best. You might want to try Trustee Sales.
Here is a link to a paper specializing in them.
http://www.sddt.com/RealEstate/
First you check for properties in an area your interested in, then you have a prelim title search done on the ones that show some promise, do the math and attend the auction (usually on the front steps of county court house).
It doesn’t cost anything to watch one, if you want to bid, you take a cashiers check to the auction. Before the bidding, you show the auctioner your check and its amount. When the bidding starts, you can bid up to your amount on your cashiers check. Naturally you don’t know what the amount the other bidders brought to auction. Sometimes you could be the only bidder besides the bank.
In a trustee auction all secondary liens and judgments drop off the note except some tax liens. Its not a bad way to buy rental property, but at the present time prices are a little dicey. You could still make a killing now and then. Say you have a house with a $100,000 first and a 300,000 second. If the second trust deed holder messes up and doen’t cure the loan, a bid of $100,001 would leave the banks automatic bid of $100,000 out of the loop. From there it would be a feeding frenzy among the bidders. And like I said, sometimes no one even shows up to bid on that property.
July 13, 2006 at 11:36 AM #28253jawbone_shackParticipantThank you everyone. I appreciate the information.
-
AuthorPosts
- You must be logged in to reply to this topic.