Updated almost 9 years ago on . Most recent reply
Liens and Other Hidden Costs
Hello, I'm looking to cut my teeth in real estate investing and am in the education phase. I'm trying to soak in as much information as I can, so I am super glad that I found Bigger Pockets!
I was wondering if anyone could give me some insight on what hidden costs I might need to look out for what purchasing a foreclosed home at auction... i.e. is the buyer responsible for unpaid HOA fees, utilities, etc. and how can I determine if any such costs are associated with the property?
Most Popular Reply
Pre-foreclosure is when a bank files a notice of default. If the owner doesn't remedy the situation, the bank moves to the court proceedings to foreclose the property. The bank might try to sell it to a third party at an auction. If they can't find a buyer (50% of the time they can't), then the bank will buy back the property. At that point it is a bank owned property or REO.
If you buy a property at the auction, it might be occupied, and you'll be responsible for evicting the occupants. It will still have any liens attached. You'll be responsible for those liens. Sometimes the liens are more than the value of the property. All liens are recorded at the county clerk's office where the property resides. Many counties have access to the records online, otherwise you have to physically go there. You'll have to negotiate or pay all of the liens.
If you wait for the bank to buy it back at the auction, they'll be responsible for removing occupants and clearing out all of the liens before listing the property for sale as an REO.