Best way to find foreclosures/ preforeclosures in Charlotte (looking for primary residence)
Investor · Greenville, SC · Member since 2013 · 85 posts · 17 votes
Hello - I want to find a good source to locate for foreclosures (preferably pre-foreclosures) in Charlotte, NC. Considering making a purchase with FHA loan as primary residence for 2 years or so if I can find a good enough deal.
Is driving neighborhoods, locating empty houses, writing letters, etc. the best way or is there some sort of service that specializes in pre-foreclosure listings? Also, at what point should I get a realtor involved?
Any input would be appreciated - thanks!
Banks price their REOs based on market values. They may be higher than you want to pay initially, but I've never seen them price them based on what they were owed. In many cases those would be ridiculously high prices vs. the market. But I do see them pricing them at 100% of the current market values, less any repairs (which are almost always needed.)
About once a month they will drop the price. An agent can help with watching for the drops. When it hits a good price, a bunch of offers will appear and it will sell quickly. So, you want to know when the drops occur. If a property has been on the market for a while, say six months or more, a lowball offer might get accepted. Otherwise, its unlikely. You have to catch those price drops then get your offer in quickly.
You're barking up the wrong tree trying to buy a REO with a FHA loan. REOs are hard to buy, period. You'll need to make 10-20 offers to get one bought. Trouble is most, nearly all, REOs won't meet FHAs inspection requirements. So, you will need to, literally, look at hundreds of REOs, making offers on only the very best ones to get an accepted offer on a property that might qualify.
FHA loans are absolutely the worst from the seller's perspective. There are lots of buyers out there that are making all cash, no contingency, quick close offers on REOs. Banks and even ordinary sellers are highly inclined to take those offers. An FHA offer is especially weak on a REO because the seller knowns they will have inspection issues and banks are often unwilling to make any repairs at all. When I was buying, using hard money, I would consider 100, look at 50, make 20 offers and buy one.
Pre foreclosure means a property that has had foreclosure paperwork filed, but hasn't yet gone to the auction. Some of these get listed on the MLS, often as short sales. Those have many of the same difficulties as REOs. In addition, you're dealing with a lender, sometimes two, who have to approve the short.
You might have luck doing direct mail or door knocking pre foreclosures. Get a GOOD list somewhere. The best source is the county recorder, who receives the initial foreclosure filing. Sometimes that data is readily available. Often, its in some obtuse and hard to use system. But go to the courthouse and ask for help in finding this info. In some areas, there is a company or two that collects this data and distributes it for a price. If you can track them down (try going to REIA meetings in your area), that can be the best source. I've found foreclosure.com to be useless. The data is out of date, so you spin your wheels on deals that are already gone.
But really, primary residence + FHA = buy a pretty house off the MLS.
You probably don't mean 'foreclosure' as in courthouse foreclosure, since these are all cash and it is extremely hard to finance with a GSE or FHA. So I assume you mean REO, or bank owned, after the foreclosure is final. The best place for that is via the MLS.
IMO, there is never a reason to get a realtor involved in a courthouse sale (a foreclosure).
Thanks for reply Chris Martin. I have signed up for trials on foreclosure.com and one other site, and have noticed that finding deals on REO properties is pretty tough because generally the bank wants what they have in it - which is often more than the property is worth.
Is it worth making offers 10-20% below asking price on REO properties or is that a total waste of time?
Banks price their REOs based on market values. They may be higher than you want to pay initially, but I've never seen them price them based on what they were owed. In many cases those would be ridiculously high prices vs. the market. But I do see them pricing them at 100% of the current market values, less any repairs (which are almost always needed.)
About once a month they will drop the price. An agent can help with watching for the drops. When it hits a good price, a bunch of offers will appear and it will sell quickly. So, you want to know when the drops occur. If a property has been on the market for a while, say six months or more, a lowball offer might get accepted. Otherwise, its unlikely. You have to catch those price drops then get your offer in quickly.
You're barking up the wrong tree trying to buy a REO with a FHA loan. REOs are hard to buy, period. You'll need to make 10-20 offers to get one bought. Trouble is most, nearly all, REOs won't meet FHAs inspection requirements. So, you will need to, literally, look at hundreds of REOs, making offers on only the very best ones to get an accepted offer on a property that might qualify.
FHA loans are absolutely the worst from the seller's perspective. There are lots of buyers out there that are making all cash, no contingency, quick close offers on REOs. Banks and even ordinary sellers are highly inclined to take those offers. An FHA offer is especially weak on a REO because the seller knowns they will have inspection issues and banks are often unwilling to make any repairs at all. When I was buying, using hard money, I would consider 100, look at 50, make 20 offers and buy one.
Pre foreclosure means a property that has had foreclosure paperwork filed, but hasn't yet gone to the auction. Some of these get listed on the MLS, often as short sales. Those have many of the same difficulties as REOs. In addition, you're dealing with a lender, sometimes two, who have to approve the short.
You might have luck doing direct mail or door knocking pre foreclosures. Get a GOOD list somewhere. The best source is the county recorder, who receives the initial foreclosure filing. Sometimes that data is readily available. Often, its in some obtuse and hard to use system. But go to the courthouse and ask for help in finding this info. In some areas, there is a company or two that collects this data and distributes it for a price. If you can track them down (try going to REIA meetings in your area), that can be the best source. I've found foreclosure.com to be useless. The data is out of date, so you spin your wheels on deals that are already gone.
But really, primary residence + FHA = buy a pretty house off the MLS.
Thanks Jon Holdman. Great insight.
After getting burned on my condo that I bought at peak of market in 2006, I am going to be very careful this time around and really want to put myself in a position to have some solid equity going in 2-3 years.
The Charlotte market is a bit nuts now... homes have gone from being undervalued to overvalued in a matter of months.
Guess all I can do is get myself as edumacated as possible and keep on the lookout...
In my experience, I have not had any trouble getting an offer accepted on a foreclosure. I have made 2 offers on foreclsures (one was FANNIE MAE) & the other an REO & I got both accepted.
Granted, it was cash but I certainly have never looked at hundreds of homes & made 50 offers.
I know what you are meaning to say. 'foreclosure' is such an overloaded term. I blame realty trac. You are buing REOs, not foreclosures. Yes, cash offers on REOs are pretty straightforward. I've been there. Sellers will take my lower offer all day instead of dealing with a financing contingency.
Offers with FHA financing, as the OP is seeking, result in a higher rate (or much higher rate) of rejection as Jon points out.
Chris Martin you are correct here. Buying a foreclosure is like saying you are buying a set of wheels. That being either a vehicle or the actual tires. It is slightly misleading.
You can buy a property that is in foreclosure (short sale or sheriff sale) or a property that has gone through foreclosure (REO). Each have their pros and cons.
My offers were financed with hard money, so not nearly as strong as cash. Cash is king in the REO market. These houses consistently have condition issues and the sellers know that makes lenders nervous.