Buying occupied house at foreclosure auction

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Buying occupied house at foreclosure auction

Nick M.
Real Estate Investor · Sterling Heights, MI · Member since 2009 · 71 posts · 14 votes

I bought a house at a foreclosure auction and am in the process of signing contract and preparing for closing in 30 days. The house is currently occupied by the people that the bank foreclosed on. 

From your experiences, what is a good/effective/quick way to have the current occupants move out? 

Thanks in advance for your thoughts!

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  • Randall AlanPro Member
    Investor · Lakeland, FL · Member since 2017 · 1k+ posts · 1k+ votes
    2y
    Quote from @Nick M.:

    I bought a house at a foreclosure auction and am in the process of signing contract and preparing for closing in 30 days. The house is currently occupied by the people that the bank foreclosed on. 

    From your experiences, what is a good/effective/quick way to have the current occupants move out? 

    Thanks in advance for your thoughts!

    @Nick M.

    We have been through that situation several times.

    It depends on your objectives with the property, but my first thought for you is - “are you sure you want them to leave?”

    We actually rented the unit back to the existing tenants for as long as they wanted to stay because we didn’t have to do anything to the unit to start generating income.  
    Also - presuming you paid more for the property than was owed on the mortgage due to competition on the auction (several presumptions there) - the previous owners are entitled to those excess funds from the court - which gives them a resource to be able to afford our rental rates.  this worked out well in the short term for us.  Or,  it also works out well to give them money to move on if you want them to exit.

    As far as the basic question goes though, I just went to them and said,  “Hi, we bought your property in the foreclosure auction and you have a few choices…. You can either rent the unit from us at $X per month, or you can exit within the next 7 days, or we can have you evicted.  We would obviously like to avoid the last scenario if possible for everyone’s sake”. If no one answers the door, you can put that in a letter / notice and post it on their door.  

    Worst case you can post a 3 day notice and just begin the eviction process if you can’t make contact with them.  Eviction is really your only legal option if they are not communicating with you.  

    All the best!

    Randy 

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  • Nick M.
    OP
    Real Estate Investor · Sterling Heights, MI · Member since 2009 · 71 posts · 14 votes
    2y

    @Randall Alan

    Hi Randy - thank you so much for your feedback and advice. Your detailed explanations of the potential options are very helpful - my first time at a bank foreclosure auction and as I am going through the process I try to anticipate what all might be coming my way and prepare as best as I can.

    Thinking about using it for our family’s summer “vacation home” and short term rental when we are not using it. Thinking vrbo or Airbnb. Have never done this before and will need to start getting up to speed on what all is required to get on vrbo and Airbnb, any local city requirements for this type of use.

    Thanks again

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  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    2y

    These are generally very emotional situations for the owner that lost it.

    @Randall Alan  gave you the 3 basic options..

    Although if your going to repurpose it.. then the only option sounds like they need to move.

    I too have been down this road a number of times.. And you will find folks all react differently I have had them move right away and leave it broom clean.. I have had others strip the house literally to the studs.. take their wows out on the house and you.

    So do approach them very gently and ask them what their plan is as you will need possession.

    based on their response will give you your next course of action. If you show up and things are already boxed up .. then you know they are probably moving on.. If nothing is done then you know you are going to have to work something out or evict.  

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  • Nick M.
    OP
    Real Estate Investor · Sterling Heights, MI · Member since 2009 · 71 posts · 14 votes
    2y

    @Jay Hinrichs

    Jay - thank you for your thoughts and I definitely intend to be mindful of the delicate situation this may put the current owners in and handle it appropriately.

    1Reply
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