Buying Foreclosures in General

NEW -> Contingent Buyer Assistance Program
<p>graphrix,</p>

<p>I'm thinking more and more this(foreclosure) is the way i should try and get a house in irvine. I have some relatives who recently came into a huge chunk of liquid assests from selling their business and are looking to use it. I've talked to them about the idea of securing a home on auction with their capital and then i purchase the house from them. Obviously capital gains and the such are an issue, but as long as the selling price isn't fraudulent between the seller and I, what do you think of this idea?</p>
 
Hi WantToLiveInIrvine,





Good luck with this house - you won't be getting any competition from my family. I thought I was going to at least follow up with the trustee sale this Thursday, but my father doesn't want to deal with all the messy details that a foreclosure purchase brings. Possible eviction proceedings with all the associated legal costs, buying the house as-is, etc.





Many thanks to all the people who answered my questions - especially Graphrix!





I think my housing search ends today. We looked at Mille Fleurs in Woodbury - Plan 2 and 3 meet our needs, but my father pretty much despises the exterior aesthetic of the houses there (and all new housing developments in general, i.e. Serra in PS). The interiors are nice and sizable, but the exteriors of these houses make them look similar or smaller than our current house, which low 2000s sq ft. It's something my father just can't come to terms with. Unless we can get those houses (plan 2/3) for 1.1 or 1.2 Mill, I think it's a no-go.





We tentatively decided to search for a contractor to remodel our current house to accommodate my terminally ill mother's needs for a full bath downstairs. Anybody have any leads to a good contractor? Thanks in advance
 
<p>WantToLiveInIrvine - First I would consult an accountant about maybe going on title on the intial purchase. There might be away to reduce the taxes but I am not sure. Maybe a trust would work. I will be talking with a trust attorney this week so I will see what see says and let you know. What is your relation to the family members? </p>

<p>Second I would go to the auction if that is where you plan on buying and get familar with the process. Make sure you go a few times and take note of who is there. You will notice who the professionals are and usually when they aren't bidding they know something you don't. I went a few weeks ago and there were not too many pros there. I know a few and they have been on an extended vacation lately. Many of the properties are not good deals because the loans were done in 2005 and 2006. Lots of fraud too. </p>
 
<p>muffdaddy - no competition here either. That isn't the property i'm interested in.</p>

<p>Graphrix - The relative in question is my father. My whole agenda is to purchase the home on the "up-n-up" from him and have my wife, my 30-year loan and worry about the next house when that time comes. I'm not sure, if i get on the title initially will the bank still give me a loan to buy a house i own already? I plan to start attending a couple of auctions to see the scene. Is there another way to purchase foreclosures aside from auctions? Someone said its easier to negotiate with a homeowner/bank during foreclosure for a short sale than the auction process... do you agree with that? and is it a guarantee that auction price will be cheaper than any open market sale price?</p>
 
excerpts:

<p>"Don't think you're going to buy a house from a bank at a discount. It's not going to happen - you're going to pay the same price you'd pay on the MLS.</p>

<p> Also, at auction you really don't know if you bought the house you think you're buying. There's no verification or guarantees of address or parcel number, and no guarantee or verification of other loans or liens that may be attached to the house. And no guarantees of access to the property for inspections. There's no title insurance or escrow.</p>

<p> People take for granted what their title insurance provides them. You need to do that research yourself, and no one at the county recorder's office will help you.<strong> </strong>Buying at auction is the absolute riskiest way to go, and I advise no new client to start there. They really have to be perfect at title research and property inspections before they risk that kind of money."</p>




http://www.mercurynews.com/realestatenews/ci_5387933





<p> </p>

<p>


</p>
 
<p>Title report may not show all the leans because a report is as good as the title researcher. Do you pay title search enough to get a very comprehensive one? I would not trust a free one from a friend. </p>

<p>Then there are loans against the home filed just days before title search; therefore does not show up in the report. If I buy these foreclosure, I certainty will not buy without a very deep discount for taking the risks.</p>

<p>You have to be extremely careful to buy a home from anyone/MLS. Period!</p>

<p>You have to absolutely know who the homeowner is. Someone I know just bought a home from a homeowner and lost his deposit. Turn out, the house was in NOD just a few weeks after he gave deposit to the seller/homeowner. The homeowner, turned out, is a scam artist.</p>
 
<p>Irvinemom, how did your friend lose the deposit? did he/she pay the owner directly without going through escrow? </p>

<p>As I research the foreclosure market, I realized that this is not for the average Joe (me). For me the only good information is that if the same property is listed on the MLS then you know that the seller is under pressure. Thus, one can try to low ball them. However, a lot of these people don't have enough equity to really accept a lowball offer; secondly what I have noticed is that only about 20% of those that are defaulting are actually listing their property. Most of the interesting ones (those with equity that don't list their properties) usually don't go all the way through to trustee sale--one way or another they find a way to bail themselves out of it and the sale gets cancelled. I would waste my time calling week after week and then on the day of the sale it gets cancelled. Those that actually go through to trustee sale usually don't have any equity, thus the risk you are taking in bidding in this market would not outweigh the benefit. Anyway, good luck to all those who decide to go the foreclosure route, but my 2 cents is unless you really know what you are doing it's just not worth it. I cancelled my subscription to CRR and I'm just going to wait out the market for now.</p>
 
<p>ocprince - The buyer is a very young man (25 yr-old) who got taken advantage of from a pro-scam artist. He went through escrow and everything. It looks more like this now:</p>

<p>1. The seller is a straw owner.</p>

<p>2. His real estate agent is a scam-artist, who is also a broker, who also has escrow and mortgage brokering under his umbrella.</p>

<p>It's so sad for me to see this young man got tricked into these scams. I say he deserves an ethical good RE agent to help him with his next house. I had a few RE agents in the past. None of them I could trust for sure to recommend.</p>

<p>I think real estate is a very scary business.</p>
 
<p>One thing with buying real estate always check the agents both buyer and seller at <a href="http://www.dre.ca.gov">www.dre.ca.gov</a> Granted they aren't the best about punishing them with violations but you can find out what other ABAs they have such as mortgage or escrow. I always have made them use my mortgage, escrow and title or no sale. You couldn't do that two years ago but you can now.</p>

<p>With title insurance there are different policies and when you buy a foreclosure you want to get a full policy or the most expensive one. Most people won't do this because the sales agent/mortgage broker/title rep. will tell you it isn't needed and you can just get the normal policy that you would if it were a normal transaction. This is wrong and if you get a full policy you will be fully covered. Anyone trying to stick a lien on there after you took title or even just before will be out of luck. It is about twice the cost of what a title policy costs when you purchase a home the "normal" way. </p>

<p>WantToLiveInIrvine - IIIrvine, Irvinemom and OCprince all make great points and I back all of them. Is it easier to buy before the auction? Yes in the sense you could knock on their door tell them you want to but the house at $x and they say yes and you go to escrow the next day. The whole process would be no different if you knocked on someone's door with no financial problems and they agreed to sell. Only problem it is not that easy. You have to find the owner. Does he live there? Can you find his phone number? Is it a good deal? Then how many other people knocked on his door before you did? I am not trying to discourage you but as ocprince said it is a lot of work. </p>

<p>Here is an example of a foreclosure where there must be something seriously wrong with the property MLS# P564131. I mentioned this property to ocprince because it is in VP where I live and where he wants to live. The guy owed about $650k and the lender probably bought it back for that. That means no one at the auction bought it for that price and now it is listed for $879k. I can count on one hand maybe two how many places in VP that have sold for less than a million in the last two years. Note that the agent says "look past the clutter". Translated that means despite being knee deep in beer cans and when you walk on the carpet it feels as if it is wet grass you just need to look past that. "OMG I think something just crawled across my feet!" Oh yes the owner had a "pet" rat collection. "What is that black stuff on the walls in the bathroom?" Oh it just needs a good cleaning from a professional crew. Yes a hazmat toxic mold specialist crew. </p>

<p>Ok so maybe it wasn't that bad but it could be. If it isn't I should have bought it for $650k and spent a $100k to fix it up and sell it fire sale for $850k. Two other properties in that general area recently sold for high $900k and they needed remodeling. So with that in mind I know something was really really wrong with the place and $100k wouldn't fix it up to par. Like a said before I don't want to discourage you but to find an actual deal takes a lot of work and if no one is bidding on the property there is something wrong with it. If you are willing to work that hard for it just value your time, work smart and you can find a deal. If you haven't checked it out already this place has a bunch of great info <a href="http://www.foreclosureforum.com/index.html">http://www.foreclosureforum.com/index.html</a></p>
 
<p>I've been down this road a time or two before. I certainly don't recommend it unless you have a good grasp on what is happening and you fully research each and every person as well as the property. My worst "failure" came when I purchased one half of a duplex. I found out there was mold as well as rotted wood and termites. So I had to kick the other family out, tent the house (pay for the other family to live from a hotel), repair everything as well as pay the mortgage, insurance, etc. etc. </p>

<p>I thought I had a 258k equity, I barely walked away with 15k after everything was said and done. The RE agents walked away with more money than I did.... The contract certainly made GREAT money. But in the end was a a very nice place and is now selling for a little over 1m in newport. Ohh well... take it easy </p>

<p>-Jason</p>
 
For those of you who can't wait and need to buy soon, have you tried low-ball offers on REOs?


I think the bank would be more willing to accept a low-ball offer than a typical seller.
 
Of the REOs in the MLS, sold since Feb. 1st, the homes sold for an average of 93% of the orignal list price & 97% of the final list price. The low was 75% of the original list price & 88% of the final list price. The high was 107% of the original & final list price.
 
I got some questions on Trustee's Sales. What would happen If I am a winning bidder on a trustee's sale but the Notice Trustee Sales was requested by the junior lien holder (2nd mortgage lender)? Will the trustee transfer the property title to me? Or I just become another junior lien holder?

Here is a foreclosure transaction history. I was suprised by the winning bid on the $950k property ( 8 Millbrae, Irvine 92602) was $150k.



1st Loan 12/20/04 $648,000.00

Default 06/19/06 Borrower $12,294.00

Default 08/27/07 Borrower $22,587.00

Trustee Sale 11/30/07 $719,752.00



2nd Loan 01/14/05 $87,000.00

Default 10/05/06 $7,083.00

Default 07/11/07 $10,262.00

Default 07/16/07 $75,567.00

Trustee Sale 11/16/07 $106,740.00



FCL 01/03/08 $150,261.00



It will be too good to be true that the winning bidder (on trustee's sale requested by a junior lien holder) actually get the property title.



Can someone tell me it is true?
 
<p>A junior lienholder generally cannot wipe out a senior lienholder. I'm sure there is some weird set of circumstances where the equities would be otherwise, but it would be a one in a million situation.</p>

<p>In Fla, where we do judicial foreclosures, the junior lienholder seldom forecloses, but it's possible, depending on the equities. If the first lien is small enough, it would pay to bring it current and kick out the borrower. Don't know what that would do to the due on sales clause. Then the second would be the owner and the first would still lien the property.</p>

<p>I assume this would be true in Cali also.</p>

<p>Also, every once in a while the borrower pays one mtg and not the other. Blows my mind. I guess they are trying to do the right thing by paying somebody.</p>

<p>So if the junior lienholder was paying the first (or the borrower, inexplicably was), the buyer at the foreclosure sale would take subject to the first.</p>

<p>Any reason Cali would be different?</p>

<p> </p>
 
You become the junior lien holder. All you are doing is bidding on the 2nd lien paper, hoping to get the payments and the money owed back. If they default on the first, and get foreclosed on, then you are screwed. You could try to get your money back being a recourse loan, but good luck. You actually would be on title, but the first lien comes first, and if they foreclose, then you are essentially wiped off the title. There is a reason why no one ever bids on second/junior liens, it is just way too risky. Well, hardly anyone is bidding on anything, so it is way too risky period.
 
You must log in or register to reply here.
Back
Top