Im moving my purchases to buying at foreclosure auctions, so I am new at it. Its no cash cow or anything but I figure its something I should learn, and kinda enjoy it.
I know there are a million ways to mess up with these. Thats why Im paying for title research and talking to attorney and reading. But what I wish is if someone would just tell me "look, these are MOST of the things that can screw you, im not saying there are not others, but if you do this you SHOULD avoid 95% of the big monumental mistakes"
People always think I am asking for some guaranteed way to not get screwed and disclaim things to the point of uselessness. If I wanted to avoid all outcomes in which I lost money, id go work at burger king. So I was hoping someone could comment on this and/or my current assumptions on what I think are the top things (listed in order below) that could cause you to make a mistake at an auction. (This is based on going by the property to making sure it isn't burnt down or something and that im getting it at a good price. )
1. You could buy a second mortgage or a HOA lien and still have 1st mortgage out there
2. You could buy a home with HOA liens on it that are not listed as a defendant and have to pay them a fee OR fight with them because they think they are still owed money.
3. You could buy a house from someone in which the IRS has attached liens on that the previous owner didnt pay and they were not listed as a defendant.
I just want to avoid the big things that would involve me loosing 100k by not buying what I think I am buying via a 2nd mortgage or whatever.
What other big things do people look out for that are not on the list?
Thanks for any help.
@Thomas Dionne make really good friends with a title agent to run title reports prior to purchase. Watch out for the HOA / IRS liens that you mentioned, as well as Mechanics Liens and Personal liens if the home were used as collateral in a biz loan etc. You mentioned driving by (which is obviously a good idea) but inspect as closely as possible and determine if the property is occupied. If occupied, know exactly what the occupants rights are in your state (both owner occupant and tenant occupant w/lease and w/out lease).
Most importantly, be a ninja at comping the property out and stick to your number. It's easy to get yourself revved up in the auction environment!
Hope that helps--Tim
There are many details in the 3 biggies you cite. Even a title search cannot uncover certain issues. You often need to read the FC court documents.
These might not lose you $100K but they can sure turn a winner into a loser.
Buy a meth house
Buy a house that had a death in it that you must disclose when selling.
Buy a house the city has condemned
Buy a mold house
Buy a house with significant unpermitted work (can prevent resale)
Back property taxes (depending on state)
Back HOA dues and extra fees (depending on state)
Homeowner who won't leave. Evictions are tough in some places.
Home with stripped metal/piping or cement down the toilet. Damage by the Homeowner is expected and not normally huge but don't underestimate their creativity I had one who left all faucets on and sump pump and heat off for 3 months in winter. Basement was a very large block of ice. Luckily not much more.
I know this thread is a bit old but, Lots of info is linked to in the thread below.
Also, HOA debts whether liens or not, and whether named as a defendant or not, stay with the property in Fl.
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