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Tips for buying a foreclosure? (1 Viewer)

Clown Car

Clown Car

Footballguy
We sold our little house and have our sights set on a foreclosure in our very small rural town. It's a modular house, but not an actual mobile home. It is 4000 sq ft and the bank wants $283k for it. It's been on the market for a year. Bank of America owns it.

We want to offer about half for it. Thoughts? Insights?

 
Get a home inspection and an appraisal to get a legit value.

Without knowing the exact market/details, offering 50% might be too little.

 
Clown Car said:
We sold our little house and have our sights set on a foreclosure in our very small rural town. It's a modular house, but not an actual mobile home. It is 4000 sq ft and the bank wants $283k for it. It's been on the market for a year. Bank of America owns it.

We want to offer about half for it. Thoughts? Insights?
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Why half? Why not a quarter?
 
Almost all we can afford. We are also doing a 203k program for renovations. So house plus renovations equals all we can afford.

 
The asking price of the bank is heavily influence by the debt on the house. It may already be a good deal, which means the bank will be unwilling to discount. Or it may be near full price and the owners may have destroyed the house.

What is the market value of the house if it were in good condition?

What kind of things are wrong or missing with the home?

It is hard to say how to approach this without knowing some facts

 
Clown Car said:
Almost all we can afford. We are also doing a 203k program for renovations. So house plus renovations equals all we can afford.
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We did one of these. Before I unleash an MOP rant let me find out a little more first.

I would try to find the right neighborhood over just a cheap house. A modular home for $283k in a rural area...is there any reason you all cannot find a regular home instead of modular? Do you need 4,000 sq feet? Is that the appeal for the family?

The 203k can be a nightmare. You have 6 months to make your upgrades or the bank will pull back the funds. I think they might allow for 9 months but the bank will almost take over in getting things done or pulling back the funds.

-My 1st and only real advice if you do one is that you have your contractors in place and you really think you can trust them. They like to act as if they can do your job no big deal but almost everyone of the folks we hired I had to stand over and push to get them to come out and do what they originally quoted me. So be careful of lowball proposals.

We were given a loan of $175k plus about $20k-$25k. We put in brand new hurricane impact windows and the house in FLORIDA had only window units for AC so we put in the central air and all the ducts. Easily ate up all the money they gave us and then some.

3 yrs later we are closing on Feb 2 for almost double what we paid. Home sits in Miami Shores/Biscayne Park though and so I say location location location. We took just about the worst shape house in the neighborhood and went to work on it.

Windows-Went thru 4-5 before I landed with a good one. Had to hire them from the North end of Broward County to work on my home in Miami. The cental A/C also had to keep getting new quotes as companies would never show up after they quoted us. Was really tough at times trying to beat bank deadlines, they are unforgiving.

 
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We don't want to live in a neighborhood. We have ten kids and five dogs. It's just better for us to be away from other people.

Nobody wants this house. It is just off the side of the road. On ten acres. It's modular so taxed like site built but insured like mobile home. Anyone who has $283k to spend will buy a better house in a better place. The Internet is only 1.5 down. But we only have .5 now so it's a step up.

I completely trust our contractor. They are kind of social acquaintances of ours. We serve in the same charity stuff, my kids volunteer for her, her daughter plays in the theater orchestra with my husband, they are pillars of the community. And it's a super small town.

The house is not fancy. Just big. Cheap carpet, vinyl, laminate. No fridge. It had been vandalized but repaired. I figure it's win win win. It's not vacant, it's off their rolls, and we get a big house no one else wants and only I need.

 
A year vacant can wreak havoc for sure. Have you been inside? Has the AC and heat been maintained? A year with no AC in the south and I don't know if I'd pay anything, let alone half price.

What's the land worth? Good septic and well? Has the contractor taken a hard look at it?

 
Been inside a couple times. Ac was stolen and replaced. Well and septic should be fine. Land isn't worth anything. Contractor looked around beyond what I was asking for and said if he was me he would be all over it.

 
I am in the commercial business where my job is sometimes foreclosing properties granted as collateral.

here is your question from my side; my loan was 250k and my house as collateral was worth 350k based on appraisal, which I am required to get annually. why I should I sell the property to you for 175k and when I try to, what will my internal approvers think of the transaction?

 
Clown Car said:
We don't want to live in a neighborhood. We have ten kids and five dogs. It's just better for us to be away from other people.

Nobody wants this house. It is just off the side of the road. On ten acres. It's modular so taxed like site built but insured like mobile home. Anyone who has $283k to spend will buy a better house in a better place. The Internet is only 1.5 down. But we only have .5 now so it's a step up.

I completely trust our contractor. They are kind of social acquaintances of ours. We serve in the same charity stuff, my kids volunteer for her, her daughter plays in the theater orchestra with my husband, they are pillars of the community. And it's a super small town.

The house is not fancy. Just big. Cheap carpet, vinyl, laminate. No fridge. It had been vandalized but repaired. I figure it's win win win. It's not vacant, it's off their rolls, and we get a big house no one else wants and only I need.
Click to expand...
wait, what :shock: Do you all foster kids?

 
Clown Car said:
We don't want to live in a neighborhood. We have ten kids and five dogs. It's just better for us to be away from other people.

Nobody wants this house. It is just off the side of the road. On ten acres. It's modular so taxed like site built but insured like mobile home. Anyone who has $283k to spend will buy a better house in a better place. The Internet is only 1.5 down. But we only have .5 now so it's a step up.

I completely trust our contractor. They are kind of social acquaintances of ours. We serve in the same charity stuff, my kids volunteer for her, her daughter plays in the theater orchestra with my husband, they are pillars of the community. And it's a super small town.

The house is not fancy. Just big. Cheap carpet, vinyl, laminate. No fridge. It had been vandalized but repaired. I figure it's win win win. It's not vacant, it's off their rolls, and we get a big house no one else wants and only I need.
Click to expand...
Offer the least amount you can. I would use the money to ensure the basics are done right. We did a 10 year sealant on the roof($75/5gal) and got a 5 year all good cert from the insurance company. Saved me a lot from having to replace the original 1945 Cuban Tile roof...they don't make 'em like that anymore.

Offer the least, the worst they can do is say no. Find a happy medium.

God Bless you and your 10 kids, you sound like an amazing human being. I hope you get the house and have a ball with the family on all that land, sounds like heaven for all of you. 10 acres? You could become a farmer and save some money at the grocery store.

 
sbonomo said:
Clown Car said:
We don't want to live in a neighborhood. We have ten kids and five dogs. It's just better for us to be away from other people.

Nobody wants this house. It is just off the side of the road. On ten acres. It's modular so taxed like site built but insured like mobile home. Anyone who has $283k to spend will buy a better house in a better place. The Internet is only 1.5 down. But we only have .5 now so it's a step up.

I completely trust our contractor. They are kind of social acquaintances of ours. We serve in the same charity stuff, my kids volunteer for her, her daughter plays in the theater orchestra with my husband, they are pillars of the community. And it's a super small town.

The house is not fancy. Just big. Cheap carpet, vinyl, laminate. No fridge. It had been vandalized but repaired. I figure it's win win win. It's not vacant, it's off their rolls, and we get a big house no one else wants and only I need.
Click to expand...
wait, what :shock: Do you all foster kids?
Click to expand...
 
I agree with MOP, offer the least you can. I am not sure if they would accept $1, but consider $100 initial offer. If they say no, they say no, but you never know

 
Thanks mop. We are offering $150k. Seriously no one wants this place. Because sbonomo, $150k is better than zero. Another place just went for $63k that was originally $200k. And my friends house sold for $159k after foreclosure, after a short sale price of $249k, after an appraisal of $350k.

But the paperwork is done. Thanks for the thoughts. Tpw please that they will take it.

 
The house we sold is a 3/2 1356sqft on 6 acres. When we moved in we had 5 kids and 1 dog. I never thought we'd have 10, and 11 is due next month.

 
I've bought a dozen or so foreclosures in the past 5 years. We've paid 60 when they were asking 90, 20 when they were asking 30, 17 when they were asking 90, 9 when they were asking 25, 19 when they were asking 20. The fact that the house has been on the market over a year is huge for you. The longer the house was on the market, the lower my initial offer. I don't think a bank ever flat out turned down one of our offers. We always got a counter. The counter will tell you more than the asking price. Like others have said, go in low. Really low. Leave yourself enough room to come up.

 
Clown Car said:
Thanks mop. We are offering $150k. Seriously no one wants this place. Because sbonomo, $150k is better than zero. Another place just went for $63k that was originally $200k. And my friends house sold for $159k after foreclosure, after a short sale price of $249k, after an appraisal of $350k.

But the paperwork is done. Thanks for the thoughts. Tpw please that they will take it.
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why not at least pull a tax card on the property and see what the county values it at?

the bank has already foreclosed, this is not a short sale. what are the annually taxes? what is the annual carry the bank is incurring?

 
You can always put in an offer for any amount you wish- the worst they can do is turn it down, which most likely they will. If they agree- just make sure you know exactly what you are getting. Foreclosures often have damage/issues that end up costing more money.

 
Chadstroma said:
You can always put in an offer for any amount you wish- the worst they can do is turn it down, which most likely they will. If they agree- just make sure you know exactly what you are getting. Foreclosures often have damage/issues that end up costing more money.
Click to expand...
Offer $100k, tear that POS down & start with a known commodity

 
jon_mx said:
The asking price of the bank is heavily influence by the debt on the house. It may already be a good deal, which means the bank will be unwilling to discount. Or it may be near full price and the owners may have destroyed the house.
Click to expand...
This is completely false. This is bank owned, not a foreclosure auction. The bank will try to get as close to market value as they can. The fact that it has been on the market for a year likely means the bank is willing to sell at a discount, though.

 
Clown Car said:
Thanks mop. We are offering $150k. Seriously no one wants this place. Because sbonomo, $150k is better than zero. Another place just went for $63k that was originally $200k. And my friends house sold for $159k after foreclosure, after a short sale price of $249k, after an appraisal of $350k.

But the paperwork is done. Thanks for the thoughts. Tpw please that they will take it.
Click to expand...
63k is about 31% of $200k so I think $150k for the place you all want might even be high but for sure you have a great shot at getting it and should they agree to the $150k, absolutely move in and enjoy life.

Can I ask what you want to put down on the house? Make sure you put down the least amount you can. Now my experience with foreclosure was that most pay cash. But you mention a 203k-rehab so I'm not exactly sure how they work together although there is a clear path where one needs the other so I imagine there are simply guidelines somewhere explaining it all.

We did a 203 with 3.5% down, 4%-4.25% about/30 yr. Our interest rate was a little higher and we did have PMI but overall I would say the 3 years was well worth it. We gambled things would skyrocket around us and they have. You can't even get a realtor to show you a home now around there for less than $350k and you are talking about a 1,500 sq ft home on maybe 1/4 acre and probably less.

I understand why you want this place. It's not the value of the home, it's 10 acres and 4,000 sq ft for everyone to stretch and run around on. I'm getting a sitcom series going in my head and then also the 1 hour 7PM time slot that used to be reserved for family television on Sunday Nights. That must be something with 10 kids. I teach and have had as many as 50 in a classroom but obviously much different dynamics. 10 kids...how many twins/triplets?

 
We are just putting the 3.5% down. We want to save cash from our sale for paying down some debt, getting some new couches.

I don't even want ten acres. We have six and they almost never go outside. Too hot too buggy too cold. Only if they have friends over.

Nothing is going to sky rocket around here. It's very small very rural horrible schools no industry no jobs. People work in Tallahassee. Nobody who doesn't homeschool wants to move here because the public school is so bad.

No twins, except my husband. All one at a time. All ######l. All perfect. Oldest is 19. Youngest will be 1 next month. It is fun. They are hilarious. But housing has been very cramped. I really don't know where we would put the next one if we didn't move. It was miraculous that we sold our house at a decent price. It will be twice as miraculous if we get the other one.

 
Keep in mind something- Assuming the asking is below market value then there is a reason why no one is buying this property.

 
I really think it's because it's modular. And all the out buildings are rotten and need to be demolished (shed, pole barn, well house, weird trailer thing). Andbif you have $286k to spend you would be buying something better.

 
If your max is 150, offer 120 to start. No more than that. If it's acceptable, great, if not, you will know from their counteroffer how much they will come down.

 
bakes said:
If your max is 150, offer 120 to start. No more than that. If it's acceptable, great, if not, you will know from their counteroffer how much they will come down.
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If it's not too late I think $120k is the right asking price. I agree with Bakes but I also want to say that if you are doing 3.5% down, $120k, $150k, it won't make a huge difference on the mortgage payment.

I also think others need to understand and CC correct me if I'm wrong but this is not their retirement or investment vehicle. Sounds like a place to simply raise a family as they are not done having kids and want to continue to raise children even after they decide to stop conceiving children.

If this home ends up being only worth what you paid 10 years down the road, sounds like you don't care that much. Will a modular home be OK in 10 years? Do they hold up well?

I don't see where you could get a 4,000 sq foot home for anything close to what you all are paying. The land would be good with one idea I had. Do you home school any of your kids? I was unhappy to hear the school system is so bad but being a Florida school teacher right now I understand, trust me.

My thought is one of those new garage/barns that really are nice rooms you can set up in the back yard. They come with A/C now and you could literally set a school house up for your kids and home school them. Just an idea.

 
At this point we really don't care what it's worth in 10-20 years. We will never retire anyway. They are all homeschooled except the oldest who is at university of west Florida now. The house should hold up, not deteriorate like a mobile home. It's on a slab, on the ground, not off grade.

 
Clown Car said:
I really think it's because it's modular. And all the out buildings are rotten and need to be demolished (shed, pole barn, well house, weird trailer thing). Andbif you have $286k to spend you would be buying something better.
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Save the barn wood and sell it on Craigslist.

 
Clown Car said:
I really think it's because it's modular. And all the out buildings are rotten and need to be demolished (shed, pole barn, well house, weird trailer thing). Andbif you have $286k to spend you would be buying something better.
Click to expand...
Be careful about saying the outbuildings are rotten and need to be demolished. That can be very expensive/time-consuming and you do not want their removal to be part of the contract with the bank.

 
pantherclub said:
Clown Car said:
The house we sold is a 3/2 1356sqft on 6 acres. When we moved in we had 5 kids and 1 dog. I never thought we'd have 10, and 11 is due next month.
Click to expand...
I really don't understand people sometimes.
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What's to understand? We like to have sex and have babies. I'm good at it. I'm 45yo pregnant with #11 and aside from a little hip and back pain, I'm perfectly fine. My friends are all getting cancer and menopause and I'm just fine. We aren't on govt assistance, the kids are all healthy, smart, incredibly good looking, well behaved, and well liked by their peers. Why not have one more?

 
cosjobs said:
Clown Car said:
I really think it's because it's modular. And all the out buildings are rotten and need to be demolished (shed, pole barn, well house, weird trailer thing). Andbif you have $286k to spend you would be buying something better.
Click to expand...
Be careful about saying the outbuildings are rotten and need to be demolished. That can be very expensive/time-consuming and you do not want their removal to be part of the contract with the bank.
Click to expand...
Not mentioned in the contract. Just in our planning. I have three boys who love To tear stuff up. It will be a lifelong project probably. Except for the scrap wood and tin roof that can be salvaged.

 
My oldest is away at the university of west Florida. She is a sophomore, but already has her aa from high school. The next two oldest are still in high school. One is not interested in college and will do some votech thing next year, her senior year, in digital media or something. The 3rd is scary smart and will be like the oldest. One is in middle school. Three are elementary age. Three are pre k.

 
My oldest worked for a caterer here in town, the second did too for about a year but she really hated food service so now she's working at Sky zone, the third will work for her too when she turns 15.

 
Thorn said:
jon_mx said:
The asking price of the bank is heavily influence by the debt on the house. It may already be a good deal, which means the bank will be unwilling to discount. Or it may be near full price and the owners may have destroyed the house.
Click to expand...
This is completely false. This is bank owned, not a foreclosure auction. The bank will try to get as close to market value as they can. The fact that it has been on the market for a year likely means the bank is willing to sell at a discount, though.
Click to expand...
like i said, check tax card value for a valuation.

 
Get an inspection and take things like water damage , mold, and termites very seriously even if it appears to be minor. Big money to repair that stuff.

 
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