Re-Purchasing Property from Foreclosure Sale
BP,
Yesterday I attended an auction in New Jersey and gave my card to a Real Estate investor (call him Rick) who was buying properties. I'm not in the market yet but I'm exploring with my bro-in-law.
Rick purchased a property for $158k and after discussing said he was going to "sell it quickly for around $170k."
Is this common? How quickly can you purchase/repurchase properties, and why wouldn't a buyer just attend the auction and buy it for $158k?
Also, if someone purchases this property, can a buyer then get a conventional loan on it?
Appreciate any thoughts on this scenario. Could be rather common, for I am somewhat new to this and trying to learn.
I won't be buying anything for quite some time, but I have liquidity and my partner has GC skills, so we're looking.
Thanks,
Roy
Most Popular Reply
If I'm understanding your question right..Once the first purchaser buys the foreclosed property, it's no longer a foreclosure. A foreclosure is the action of taking possession of a mortgaged property when the borrower doesn't pay. Once the foreclosed property is purchased, there is a new owner and borrower (the new owner could have purchased all cash as well, meaning there is no mortgage). Depending on how a foreclosed property is sold by the bank or by the person who was loaning the money, a new buyer could purchase the foreclosed property however they want (cash, loan, any other agreed upon method) I primary residence was a foreclosure. A bank loaned the money to the previous owners and the owners stopped paying, the bank took possession of the property and sold it at retail to me. I got traditional financing with 5% down. Once everything closed, I could technically sell the property the next day and it's not a foreclosure. My loan officer wouldn't really be happy because I did that so quickly, but that's a different story. As far as I'm aware, there are no laws on how quickly you can buy and re-sell a property. One thing to also know is that a lot of investors loan out their money to other investors. Depending on how the note is written, there usually will be leverage against the property in question, sometimes a different property that has value. But the point is, the investor who decided to loan money to someone could potentially foreclose on that leveraged property and become the owner. I guess I'm trying to say that not all foreclosures will be done by "banks" but instead they will be done by the person or entity loaning the money.