Is it sold for what is left on the loan? How do they come up with a price?
The bank prices the house for what the market price is. They may not take anything off the price just because the martgage balance is below the market price.
Wow. I was always under the impression that when a house goes into foreclosure, the mortgage company is only trying to recoup the balance of the loan.
How and why are foreclosures presented as an investment opportunity if they’re being sold at market value?
The banks are not in the real estate business and want to move the property as qucikly as possible. If the area is hot and the property is in good condition you may not see much discount at all. Also the people in the REO department of a bank try to get as much for these properties as they can. The house I just bought was originally listed by the bank for $165k. They eventually brought it down to $90k. But they try retail if they think they can get it.
Speaking of REOs, do you go to banks personally and speak with REO departments asking for available properties? I only ask because there are some banks whose properties are listed with real estate firms they are contracted with, and they’ll simply refer you to their agent. Do you have this problem?
Did the bank bring the listing down to 90k or did you offer 90k?
Was it on the mls or did you look elsewhere?
I offered $85k. They said no. I said if you can’t sell it call me. I went off and bought this other house and started my rehab. About 2 months later the real estate agent called me and asked if I would buy it for $90k.
It is taking about $25k in rehab and it appraises for $190k. It is on the golf course 2.2 miles from the lake so I want to rent it for 3 to 5 years and then put out the tenant and make it my weekend home.
How did you come up with the figure 90K? Is that how it is done: bid low bids on many properties until you find a taker? Did you research what was left on the mortgage? Can I walk into a Brokers office and tell them to find me a foreclosure like that?
Can I walk into a Brokers office and tell them to find me a foreclosure like that?
When you start buying houses. People will bring you deals. A real estate agent knew about this house and called me to see if I wanted to buy it. I have found an agent that sends me a list of forclosures under 100k every month. I haven’t found any deals there yet.
How did you come up with the figure 90K?I looked at the house and ran comps on it. These comps are actual sells prices of the same type of house in the same neighborhood over the last year. I got a number of $165k. I then figured I would need to put $25k to fix the house up to standard and I would need $25k profit off the house. I then figured general transaction and holding costs tend to run about $10k on any deal and that meant that my line in the sand was $165k minus $25k minus $25k minus $10k or $100k. I needed them to come back with a counter offer so I made room. They actually came back with $115k before I walked away. One problem with the house was that it was not habitable. That meant that generic person off the street could not get it financed. Unless you get a rehab loan banks will not loan on a property that is not habitable. That is how I knew that it would probable come back to me sooner or later.
There are a lot of options on what happens. i know of instances that banks will put it on the market to sell for thier own. however i know in my state, NJ, most houses go to sheriffs sale auctions. Banks dont mind thie because in the auctions people go in blind. they dont know what a house is worth half the time. They end up bidding and paying anyhwere from 90% of the value and sometimes well over the value of the property.
Thanks. I appreciate this. I have found it hard to get direct information like this.