Foreclosure Deal--What should I do?

Hi,

I am a renter looking to buy a foreclosure as a first time home owner. I came across this posting:

$105,000 TAKE THIS HOUSE BEFORE THE BANK DOES!!!
BRING ALL OFFERS!!!

ALL BRICK
4 BEDROOM
NEW ROOF
NEW BOILER
NEEDS WORK (EST.$35,000-$45,000)
CERTIFICATE OF OCCUPANY ALREADY PULLED!!! JUST WAITING ON BUYER INFO
TAXES 2006- $3,428.46
APPRAISAL DONE IN DECEMBER/2006 “AS IS” VALUE OF $127,000.00
COPY OF APPRAISAL CAN BE SUPPLIED UPON REQUEST
ARV- $160,000-$175,000

My hubby and I have small savings, 3 kids, credit is fair, but we have decent salaries.

My question is: If we could get this house. How should we approach the seller? What contigencies should be in place? I got a one mortgage approval estimate at $90K ( two months ago, our income has increased since that estimate). But I was hoping to do some seller financing deals because of our credit.

All responses are appreciated. I have been reading up on real estate, but putting into practice is a different story for me.

Thanks!!

what liens r on house and what is current mortgage bal and arrears?

do a title search!

remember you have fixup costs which if you get purchase price low enough you can take a home eq out right away to do them. You need to factor that into your offer. My gut says that $105 might be too much but I don’t know what other skeletons may be in the closet or not. Do due diligence. Play hardball.

I guess I’ll have to do the bubble bursting.

First, this sounds like a “pull” ad, an add designed to pull you in and then change up. Probably either an investor looking for buyers, a mortgage broker for clients or an agent for customers. Doubtful if it’s an honest to God needy homeowner.

Second, if you qualified for $90K thru the bank, then find something that is at least $10-20K CHEAPER than that if you still want to live comfortablely and not struggle with payments. In almost all situations, a mortgage qualifier will give you the MAX that you can afford. Don’t buy at the max.

Third, if you have a small savings, how are you going to afford the fixup? Sure, it may be inhabitable, but there is a BIG difference between that and liveable, much less loveable. Getting a equityline wouldn’t be a good option if you’ve already bought at the max that you can afford, even if it’s possible (depends on what you mean by “fair” credit).

Raj

Thanks njss and Rog J.

The insight is fully appreciated. I am being very careful and thrifty and I know the repairs are a major factor. We are getting on our feet and have no problem renting again, but I got my eye open for deals. Not looking to struggle with payments at all!

I will do my due diligence and check it out anyway. If it pans out to be a dud, it’ll just make me smarter for the next opportunity.

Thanks! NJBRDG