Can anyone advise on Buying forclosures?

Question

I just had a couple questions for anyone who has experience with foreclosures.

Do any of you use the Bigger Pockets foreclosure tool? If so, how much is it and is it worth it? I didn't see a price anywhere.

With Auction.com, is it worth even looking at until you can buy properties for cash? Seems like there isn't an option for financing

Last Question... on the website it says several types of leins will still uphold if I buy a property on auction.com such as maintenance leins, IRS liens and so forth. How do you mitigate that? Do you have the ability to do a title search before buying?

Thank you everyone!

Bruce Lynn · Answer

So we tend to mix the word foreclosures up with a couple of different situations.

On the courthouse steps is CASH in most cases within a couple of hours normally of the auction depending on the trustee.

Many if not most foreclosures get bought back by the lender and then sold as REOs or Real Estate Owned.  If you need financing this might be a better option for you.  You can check out HUDHomeStore.com for HUD REOs.   You can also have a realtor set you up with alerts for bank owned properties that probably include HUD REOs and others.

Auction.Com in my experience is acting as a trustee for lenders for cash foreclosures.  I would go to one of the auctions.  Talk to the Auction.com reps and ask them if anyone in your area provides financing for foreclosures.  There have been people in some locations willing to finance hard money type loans...so that might mean you put in 20%-30% and they'll put up 70-80% within certain guidelines.   There is a lot of shifting right now, so that money may have dried up in the current environment.

Also be aware that in many areas there just aren't many foreclosures.  We'll see what happens, but in my area now there are very few HUDs and very few foreclosures.   Remember there is risk buying foreclosures.  You don't always get to see inside and they can be rough.

Best wishes.

Rick Albert · Answer

Hey John,

Back during the recession I worked with a developer who bought foreclosures, however it was at the courthouse steps.

In terms of looking before you have the cash, it's not bad to educate yourself and set expectations.

My purchases were in the Los Angeles area, so not sure where you are looking.  However, a couple of things to keep in mind (again, Los Angeles perspective, not sure if it is the same way where you are):

• You cannot inspect the home ahead of time.  You can't even walk the property.  You could be getting yourself into a bigger fixer than you realize.
• With courthouse foreclosure purchases, there still could be occupants inside the property (previous owner, tenants, etc).  If they don't leave willingly, then your options are (1) cash for keys or (2) go through the eviction process, which can take months and cost a lot of money.

If you can afford the risk, then go for it.  I'm not saying don't do it.  I'm just saying that you need to understand the risks.

With liens, you can generally see them in a title report assuming they have been recorded.

Good luck!

Rick