How to find and finance foreclosure for primary or live in flip?

Question

Hello,

Me and my SO may be separating and idk what would happen to my current house, either one of us would keep it, or sell and split it, and if we do i was thinking about looking for a foreclosure for my primary residence, open to fixing it up and staying or doing a live in flip depending on the house and the area.

I want to find out what my best options are for financing assuming a hypocritical worst case scenario and say she gets the house, my savings get wiped out, and i start from about nothing. Curious how my options change with no money or if we sell the house and i get 10-30 thousand

I also have no idea what a foreclosure entails, what do I need to bring? Can I go to a few and just watch, would it be ok to find someone who knows what they are doing and just go with them to learn? Do i need a suitcase full of money to buy it immediately since some say cash only? Is there a way to look up what issues the house has before buying?

Im sure there is more im missing so any help would be greatly appreciated.

Jaron Walling · Answer

@Ryan Guffey If you're talking about REO and foreclosure auctions at the county level YES they require cash. My county auction (one every month I believe) requires a cash deposit to get a bidding paddle. If you win you have a few days to pay the remaining balance. Depends on your county auction rules.

Long story short the auctions are dead (right now). I've talked, read the forums, and attended my auction via online stream. Of 50 properties for sale, 20 get eliminated day of auction, and the remaining are skinny deals, or didn't meet our criteria. I've tracked other investors properties (auction wins) and they paid literally the same price as something listing on market. If you don't believe me attend some auctions yourself. My guess is you'll have similar experiences.

"Curious how my options change with no money or if we sell the house and i get 10-30 thousand" - I don't think buying a property is a wise choice here. Stressful times lead to dumb decisions. I know because I've done plenty of them. Most investors will discourage you from risk until you have a strategy, market research, emergency fund, or a no brainer DEAL to jump on. Something that swings the needle in your direction. You need more playing cards. That's just my 2 cents.

Ryan Guffey · Answer

@Jaron Walling i don't think its the wisest choice either, but if we cant figure it out ill have to go somewhere, and id rather not rent and over pay for something i cant keep unless its like a rent to own or seller finance like chris was saying.

Chris Seveney · Answer

I would recommend looking for seller financing vs. a foreclosure. Foreclosures typically require significant amount of work and if bidding at auction you need to pay cash. If you can find an owner who will do owner financing you may be able to get away with little down payment.

Jaron Walling · Answer

@Ryan Guffey There is absolutely nothing wrong with renting for a year, building a team, doing the market research, and buying a property! Just because you could have to rent doesn't mean you can't take advantage of it. It took me 12 months of market research and motivation to buy my first property. I developed a strategy and a mindset before I viewed a property. I was crystal clear with my agent and buying criteria. I looked at 6-7 s**t box houses before I bought one.

It's a long game. Don't get rushed.

Wale Lawal · Answer

@Ryan Guffey

Here's a closer look at the different options for buying foreclosed property:

• Buying a foreclosed home directly from the homeowner as a short sale or pre-foreclosure. Short sales can be great purchases, as the owner is still the seller, and it hasn't foreclosed yet, says Oppler. A short sale means that the lender agrees to accept less than what is owed on the property, which can mean big savings for buyers. "Just have some patience, as these types of sales can take longer than other options," says Oppler. In fact, they could take up to 120 days or more.
• Buying at auction. "Auction purchases can be very risky, as not all allow inspections or any type of due diligence in advance," says Oppler. In other words, you buy the home "as is." You may also end up purchasing a property that has other liens that need to be paid or has additional expenses. Finally, plan to have some cash on hand to make an immediate down payment.
• Buying from the bank. When a property cannot sell at auction, it becomes real estate-owned, and interested buyers will work directly with the bank. Oppler recommends getting thorough representation if you decide to go this route. "A buyer wants to make sure they are clear about what they are purchasing, defects and all," he says. If you're buying a bank-owned foreclosure, applying for a loan from the same bank may simplify matters, assuming you can get a competitive interest rate. Fair warning: Some banks will not want to finance foreclosures or will require large down payments because they can be risky investments.
• Buying from the government. This is usually the safest way to buy a foreclosure since most government agencies offer incentives and protections for buyers. "At the heart of it all, they want owner occupants to live in and enjoy their properties," says Oppler. Government-backed loan programs from the Department of Veterans Affairs or the Federal Housing Administration may offer financing options, but the property will need to meet standards for approval. Then you have programs like Fannie Mae's HomePath, which help homebuyers purchase properties the government-sponsored mortgage buyer has foreclosed on, Reiss says. The program even provides up to 3% in closing cost assistance for first-time buyers who complete a homeowner education course.

The process of buying a foreclosed home can vary depending on the circumstances, but this is generally how it will work:

• Find a home to purchase. Buyers can find foreclosures at auctions, on home search sites like Zillow and from traditional real estate agents, as well as government sources like HomePath from FannieMae and Freddie Mac's HomeSteps.
• Seek a real estate agent experienced in distressed properties. Some agents even have a short sales and foreclosure resource certification from the National Association of Realtors. Someone with experience in these types of sales can help guide you through processes unique to purchasing a foreclosed home.
• Figure out your financing. You can finance or use cash to pay for a foreclosed home, but the former can be tricky. If you plan to finance the foreclosure, you will want to obtain a preapproval from a mortgage lender. You might also consider specific loan programs designed for foreclosure purchases such as the FHA 203(k) loan, which allows borrowers to finance repairs and renovations into the mortgage.
• Make an offer. The process for doing this will depend on how you're purchasing the foreclosed property. For example, if you're trying to buy at auction, there may be specific rules to follow. For other types of foreclosures, your real estate agent can help you come up with a number that is likely to be accepted.
• Expect additional expenses. "Banks sometimes will repair houses, but sometimes they sell it as it is, which means it needs considerable work," says Oppler. While homes in need of repair sell for less than market value due to their condition, not all buyers are financially ready for a true fixer-upper.

Read this article for detailed information https://money.usnews.com/loans...

All the best!

Gina Stern · Answer

I think in Kansas most foreclosures are conducted on the steps of the courthouse, so you could go and watch one live. I think you should get some legal advice about your situation though in the first instance. Good luck.

Ryan Guffey · Answer

@Chris Seveney where would one find the MLS listed properties? Zillow, realtor.com or is there a better source to look?

Chris Seveney · Answer

CHeck MLS listed properties and search for "seller financing" owner financing or "contract for deed"

Ryan Guffey · Answer

@Chris Seveney do you have any recommendations to find places that would do seller financing? Is that something i could find on zillow or something, or need to send mailers or knock on doors, that might be harder while watching the kids.

How to find and finance foreclosure for primary or live in flip?

Most Popular Reply