New member from Chicago

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New member from Chicago

Mike B.
IL · Member since 2012 · 29 posts · 9 votes

Hi everyone,

I probably should've browsed the forums a little more before introducing myself, but I have zero knowledge about real estate and I'm experiencing information overload trying to find answers to my questions. I've been reading BP for a few hours and it seems like there is a ton of great information here as well as a lot of friendly and helpful members.

A little about me: I have a background in residential construction and I always found the idea of rehabbing SFH's appealing. I'm currently renting an apartment and am hoping to become a first time home buyer very soon. So I found BP to try to educate myself before diving in to the biggest financial decision of my life.

I was able to get a small loan from a friend at 4% interest, so for the last two weeks I've had a real estate agent that my sister recommended send me MLS listings. Unfortunately I've only looked at one property. It's a 2/1 quad, REO, and the asking price is $57K. The ARV is $80K and it needs $6K in repairs. I'd be doing all the rehab work myself. So compared to burning my money every month renting, this seems like a pretty good starter home for a first time buyer. If I get it my plan is to rehab it and live there and then rent it out and repeat the process or maybe try to sell it if I can get a high enough offer.

I have some questions before making an offer that I hope you guys can help me with:

1. How much less should I offer because I'm paying cash as opposed to financing? I know a cash offer is more appealing to the bank, but I'm not sure how much more valuable it is to them.

2. Do I need a real estate attorney or can I use a title company? Maybe this is something my real estate agent will have recommended for me, or I should shop around for the best price?

3. When do I look for homeowner's insurance? My auto insurer is a small company that gets me a great rate, so maybe I should start with them to see if I can get a discount? And if I can choose a larger deductible to get a lower rate, should I do so?

4. Sometimes I'll see a foreclosure on zillow and it will say it's been on zillow for 30 days or whatever and to go to a paid site for details like foreclosure.com. How can I get the details for free? And when I find out what bank owns the property should I have my realtor contact them or try to buy it from them directly?

I plan on spending a lot of time here on BP, and hopefully soon I'll be able to contribute to this great site! Thanks for reading!

Mike

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Scott W.
Real Estate Investor · chicago, IL · Member since 2012 · 1k+ posts · 231 votes
14y

There's a million foresclosure opportunities out there; everything is a deal right now; you're just going for the ultimate super deal (which isn't a bad thing)!

hang in there - you'll find something; tons of opportunities.

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  • Mike B.
    OP
    IL · Member since 2012 · 29 posts · 9 votes
    14y

    Thanks Kevin Tunney and Mike Hasemann!

    I decided to not use an attorney and went ahead and signed all the bank's addenda, and gave them the EM. Hopefully I didn't miss anything, closing is in 3 weeks.

    Few questions:
    1. In the addenda it said that the purchaser pays all closing costs and if I use their title company the seller would pay for my owner's title insurance policy. Is this normal? And if they are willing to provide me with a clear, insured title, why would I ever choose my own title company? What am I missing here?

    2. Also, I checked the property tax payment history and it shows that the taxes weren't paid for the second installment for 2011, and they were due August 1st. Is this common? I made my offer shortly after August 1st so I hope they weren't thinking that I would overlook their unpaid taxes and close anyway. I'm not even sure the title company would let them close with overdue taxes.

    3. When I turned in the contract and addenda to the listing agent he seemed very surprised that I didn't have an attorney. Maybe he's new or doesn't get many cash offers or both. He said that he thought I needed an attorney because he thought that "the buyer's attorney prepares the HUD1". He also called it a "preHUD" and a settlement sheet. Isn't the HUD1 prepared by the seller's closing attorney?

    4. What are my chances of getting the seller's attorney to send me the closing documents and settlement sheet the day before closing so I can have a couple people review it?

    Okay, that's enough noob questions for one post. Thanks in advance for your help!

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  • Account Closed
    Wholesaler · Chicago, IL · Member since 2011 · 219 posts · 38 votes
    14y
    Originally posted by Mike B.:
    Thanks Kevin Tunney and Mike Hasemann!

    2. Also, I checked the property tax payment history and it shows that the taxes weren't paid for the second installment for 2011, and they were due August 1st. Is this common? I made my offer shortly after August 1st so I hope they weren't thinking that I would overlook their unpaid taxes and close anyway. I'm not even sure the title company would let them close with overdue taxes.

    Taxes are usually prorated between the buyer and seller (unless stated otherwise in the contract) based on when you close on the property.

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  • Mike H.
    Rental Property Investor · Manteno, IL · Member since 2009 · 2k+ posts · 2k+ votes
    14y

    Where is your realtor in the process? You should always have a realtor. Their fee is paid out of the commission. If you don't have one then the listing agent is getting both sides.

    But the title company is going to have to send you the HUD (settlement statement) before you close. Usually, you can get that 2 or 3 days before closing. Sometimes they do it they day before.

    But they're going to have to do it before the closing table because you need to know how much to make the cashier's check out for - or how much to send the wire for depending on which route you're going.

    You typically save some of the title costs by paying cash though. But you'll get that back and more in taxes considering you'll be getting a credit for about 8 months of taxes.

    And, yes, its "almost" always a given that the bank will be responsible for catching up on the taxes due this year.

    If you don't have a realtor, ask the listing agent for an answer on that one. They should be able to tell you that right now. If you do, ask your realtor to find out for you.

    If you're paying cash, you don't need to worry about the pre-HUD. The title company will handle everything. Its simple for them if its cash. Thats why the title fees are usually much cheaper for cash deals. I believe that the pre-HUD stuff is only needed by the title company when a lender is involved so that the title company can ensure all the lender fees are included in the settlement statement and the loan amount matches up.

    Since you're paying cash, the title company will just do the HUD
    based on purchase prices, their fees, etc and any property tax credits.

    Should be easy. Best bet is to have your realtor contact the title company or for you to contact them directly and make sure. Shouldn't be an issue though. I can't believe the other realtor is that dumbfounded on what you're doing.

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  • Account Closed
    Wholesaler · Chicago, IL · Member since 2011 · 219 posts · 38 votes
    14y

    Mike Hasemann, great post! You just gave a ton of great info in that last post. Thanks!

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  • Ryan O.
    Wholesaler · Downers Grove, IL · Member since 2010 · 108 posts · 26 votes
    14y

    Eric Michaels

    Originally posted by Eric Michaels:
    Don't be obsessed with finding free data sources. That is penny wise and pound foolish. There is no free service that is good enough to base a real money decision on. If you are interested in foreclosures, pay for a legit foreclosure data service like ILFLS. Foreclosure.com is horrible.

    Great advice on ILFS, but I have some concerns regarding some of the data:

    Specifically in regards to properties that have been sold to 3rd parties via auction. It seems to me either many investors are grossly overpaying for properties, or the data for "balance due" is incorrect on the site.

    Has it been your experience that the opening bids at auction have been at least partially in-line with the "balance due" data, is the data incorrect, or am I missing something completely.

    0Reply
  • Vladimir K.
    Real Estate Agent · Wheaton, IL · Member since 2008 · 66 posts · 32 votes
    14y

    also, check out public-record.com. It's a paid source that you can legally browse for free IF your library pays for it.

    check out the list of libraries that subscribe to their service under 'library partners' link

    1Reply
  • Caroline Burchfield
    Gilberts, IL · Member since 2013 · 2 posts · 0 votes
    13y

    Hey Mike H.
    Your post really caught my attention. I'm a newby as well, and looking in the Kane County area. Elgin or west would be the perfect place to start, but where to start? A realtor? I only have about $15,000 to start (I plan on using cash to begin with) and this would include repairs.

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