Foreclosure DD checklist

[Kenneth LaVoie]

Hi All
I was wondering what unique items I might include on my F/C, REO, auction due dilligence checklist. i.e. with a regular mls listing I do general building, title search, etc. What unique situations might I want to watch out for with these non traditional avenues? Any decent books that give "real world" advice.

Thanks all!

[Steve Babiak]

Originally posted by Kenneth LaVoie:

Hi All
I was wondering what unique items I might include on my F/C, REO, auction due dilligence checklist. ...

Buying pre-foreclosure, buying at auction, and buying listed REO - these are three distinct purchase types. Each requires certain common elements - but they also have differences.

A pre-foreclosure will need to have all liens satisfied (or released); you'll need repair estimates -should be doable with access to the troubled borrower and them allowing for the needed inspections; title search and insurance will likely be a prat of such transactions.

At auction, the Latin "caveat emptor" (buyer beware) comes into play. You will have to determine what liens will survive the foreclosure (so you get stuck with those). Distressed borrowers typically have distressed housing conditions - so you'll be expecting repairs without a guaranteed entry to inspect prior to purchase.

Buying REO properties will allow for clear title, and inspections to determine needed repairs; title is almost always insured.

Due diligence varies with each of those, as you can tell from that somewhat brief explanation.

And Mark speaks from experience regarding the IRS liens :oops: