OfflineA home was scheduled for foreclosure yesterday. The property had been vacant and needing repair for some time. There were no delinquent taxes due on the property. When I drove by on the morning of the sale, I found a vacant lot where the house had once stood with fresh red dirt and all slabs removed. After checking further, I found that the city had issued a demo contract to a private company. I called the foreclosure firm who had as their client the mortgage company. They had no knowledge of the house being demolished.
The house and improvements were being assessed at $56,000 and the starting bid at foreclosure was $56,000 also. This was a HUD backed mortgage. If a buyer did not do due diligence prior to the sale at the courthouse he would stand to loose a lot of money.
The investigation does not stop until the sale actually occurs.
Buying foreclosures
Posted on: Thu, 05/29/2014 - 15:01
Buying foreclosures
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- by Mossyoak
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Buying a property at a foreclosure auction can be very risky, especially if your new to investing. Every county has different requirements, however most of them will have you register for the auction, deliver a $5,000 certified check and if you win the auction you will have to pay the remaining amount within 24 hours to a month (depending on your county).
When you win the auction, the property is yours in its current condition!! So it is EXTREMELY important that you do your due diligence prior to the auction.
All counties will advertise the properties that will be up for auction so you will have time to research the property prior to the auction.
1. Know which property you want and confirm the auction date, time & location.
2. Check public records to see if there are any liens on the house.
3. Check the condition of the property. Sometimes you’ll be able to go through
the property prior to the auction but if you can’t you’ll still want to visit it.
4. Determine how much rehab will be needed.
5. Find out if there any tenants in the property and if so find out what legal
steps you’ll need to go through in order to evict the tenants if you win the bid
6. Find out the ARV … after repair value
7. Go to the auction with you “walk away” price in your mind
If you win the auction, you get the property and everything that come with it!
So do your research if you plan on attending an auction.
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Wow, bet the foreclosure bank freaked out. LOL Good for them.
Another thing to keep in mind about foreclosure auctions is that all loans made prior to the loan under foreclosure transfer with the property. Often foreclosures are on the second mortgage. This means that the first transfers with the property. If the first is not paid, then they can turn around and foreclose on the property as well - regardless of the buyer. Ouch!
I've heard about cities red-tagging properties, that are considered nuisances and/or a liability to the city, to be demolished, but this is the first that I hear that is actually demolished! Usually there is plenty of time to work things out with the cities, but with the banks putting off the sales of their 'shadow' inventory I guess this one fell through the cracks (no pun intended!)
Valerie
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I knew there were great risks, but this takes the cake!
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What a shock THAT must have been! I'll bet you were doing double takes on the address on that one!
Thanks for sharing. Good lesson.
Karen
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