Foreclosure Auction

Ok, selling my house soon and will have a good amount of cash for a house. Been looking at a bank-owned foreclosure in my area and it is going up for auction soon. It has clean title (having gone through the courthouse steps auction without selling). It does need some repairs but nothing too major from what we can tell (I've had a couple of guys look at it with me). Probably 25K max in repairs (including needed appliances).

Anything else we need to think about with a foreclosure? Never been through this process before so want to make sure I am prepared before walking out there.

 

A clean title is the most important since once it's yours it's yours. Heard a horror story once about a guy that thought he got a great property cheap at foreclosure. Come to find out there was an environmental issue and it costs him several hundred thousands of dollars to fix, more than five times what he paid for the property. Make extra effort to make sure the title is clean as well as no environmental issue. Other than that good luck! If people are doing what you are doing that indicates at least some sort of bottoming out of the real estate market. There was an auction here this past weekend attended by about 200+ people bidding on foreclosed properties.

BTW, you planning to rent this place or live in it?

 

It went through the courthouse, was offered on the steps and no one took it, and is bank-owned now so it is supposed to have clean title already. It was builder-owned before that as he went into bankruptcy right after finishing this house and is in a development (though it is only the second house in the development but their are rules around what can be built on the other 10 lots remaining) so I feel pretty decent on the title.

We plan to live in it. We have an expanding family (3rd on the way this October) so our 3 bedroom was getting awfully tight. Ironic thing is that our house wasn't on the market but someone sent their agent to ask us if we would sell it. Pretty good deal overall.

If this deal doesn't happen, well, we become nomads. LOL. May end up building in the same neighborhood if this doesn't happen.

 

Check for mechanics liens, etc. you know, caveat emptor and all. I wouldn't move on it unless I had a clean title in hand or at least word from the title agency that all is clear. Just because the bank has it doesn't necessarily mean everything is free and clear. The dude I mentioned above also got his property via a foreclosure.

Hopefully everything is ok but I'd just be a little more cautious than usual dealing with a foreclosure. Congrats on selling your home so quickly. Unusual for this market. We just had our house reappraised for a refinance and luckily it hadn't lost value.

 

Good point on the mechanic liens.

Nice thing on our home was only one realtor was involved so we were able to negotiate down some and help them and still help us by saving 3%. Worked out well.

 

Are you selling it yourself, or will their agent only deal with another agent? [I'm wanting to move and buy on contingent that I sell. I hear the sellers market is good around here, and I shouldn't have a problem buying most anywhere.]

 

Well, here's the deal on it. Last fall, we had it on the market with a realtor and well, that was just an awful time to try to sell. About a month ago, a different realtor knocks on our door and says she has a client that recently sold her house and wanted to be in our neighborhood because her parents lived here and she remembered our house being on the market. So, the realtor asked if she could show it to her and we said sure, why not. Client liked it and sent us an offer. The realtor asked for 4% and I said Nope, you will get 3% and I will represent myself.

The other factor though is a few years back, I did real estate on the side for about a year and a half to see if I would like it (I didn't but I did do about 8 deals). So, I knew enough to be dangerous and could represent myself.

 

I'm thinking of doing my selling. Seems like all I have to do is stick with the asking price, including the closing fee, and don't get psyched down. Anyhow, the only other party I'd need is a lawyer to handle the closing....I think.

 

The biggest thing you miss out on is the MLS. Maybe think about using one of those HelpUSell services (or something similiar) that charge you very little, put it on the MLS for you, and then leave it up to you for the most part (I think they will do as little or as much hands on as you want and will charge more for the more hands-on you do). There are also companies who do flat fee real estate. Not sure where your house is but if it is around Charlotte, I know of at least one guy who offers his services for a flat fee.

 

That worked well when owners had buyers falling out of the sky and offering above asking price. Pretty sure it's not that way anymore. Some realtors won't even show your place if you are selling yourself. Also, there is the hassle of having to personally show your place and do open houses, etc. I'd probably go with a realtor these days but I'm pretty sure you can negotiate the commission down since realtors are struggling these days with so few qualified home buyers.