Originally posted by @Harry Burgos :
Hey everyone, I’m studying for my real estate exam in CT and have found a foreclosed home in Norwalk. I’d like to dig into and see if it a good investment opportunity. I have two investors interested in properties in CT but I’m not sure how to evaluate this and bring it to their attention. I don’t even have the money for a title search at the moment and was told I should find out if there are any liens on the property before anything. Can someone please help I can’t think clearly and I‘m flipping through my exam book trying to find answers.
If it is foreclosed, it belongs to the bank and is now called an REO. You have to wait for the property to be listed. You can't legally enter the building to inspect it until it is listed.
If it is in pre-foreclosure it is still owned by the homeowner. You can contact the homeowner and start the conversation. Looking in the county records will tell you most of the liens and owners, but it might miss one or two.
It's a good exercise to go through, but I wouldn't buy it without knowing a lot more.
Originally posted by @Harry Burgos :
Thanks Mike, considering the home is still occupied by the tenant my guess is pre-foreclosed. I’ve looked up some records online but found nothing as far as liens and was told the only way is to pay for a title search... is that true? I spoke with the attorney who will be handling the auction process and he’s going to email me a fact sheet, don’t know what that means... I also found the owners name and telephone, how will this conversation kick off?
If the attorney is going to "handle the auction" it is still owned by the homeowner. The homeowner is the one to talk to. You can ask them if they are willing to discuss your purchase of the property. Keep in mind that this is a sensitive and usually embarrassing time for the homeowner so they may or may not want to talk to you. I always approached it from a "are you interested in a solution to your situation" position.
They may or may not know that they can file a bankruptcy at the last minute to stop the sale. That helps them, but complicates things for you.
The foreclosing attorney probably has a title report. I've bought them from the foreclosing attorney before for $20. That was on the west coast, I don't know if they do that in your area but you can call the attorney and ask.
@Harry Burgos how did this property come to your attention? Foreclosure is a term that can be interpreted several ways. a property can be "In foreclosure" which means a foreclosure has been started but the process is not completed.
There could be a foreclosure auction, which is done as the last step of the foreclosure. This is typically done on the courthouse steps. The bank usually bids the amount they are due and if someone else bids more they get it. Otherwise it is sold to the bank.
A property could be "Foreclosed" meaning the foreclosure process is done. Normally if that term is used it means the bank owns it. It is then called an REO for Real Estate Owned by the bank. REO properties are virtually always listed with and agent to sell them.
People can still be in there even after the foreclosure auction. The winning bidder in the auction has to follow the legal process to remove the occupants. At any time in this process the property can sit vacant for a long time.
to complicate things, there is the foreclosure itself (trustee sale) which is held auction style at the court steps etc and then once (and if the bank takes it back) there is REO auctions (like auction.com) which liquidate REO after foreclosure.
depending on each state rules, the foreclosure can be halted at some point if the owner cures the default (brings the loan current). during this time you can negotiate with the owner to buy it from him and close (cash, subject-to etc)
you can buy it at the trustee sale (cash)
you can buy it from a REO listing, or a REO auction (auction.com)
so there are two different "auctions"
bake the cost of eviction into your bid if you know the property to be occupied, and consider a cash for keys offer to them before the eviction. either way it's $$