Bidding on a Foreclosure?

Question

I have a variety of questions -

1. Me and my fiance are looking to purchase a new home - Should we co-finance the house or get married now and finance the house as a married couple. (We are getting married in March)

2. We have a real estate agent that we vaguely know and we are interested in either a good foreclosure or a new home with good incentives, but she does not seem as interested in finding a foreclosed property as new homes - - should I shop around with other agents? (Is their more money to gain for her off the new properties)

3. We have got our eyes on a foreclosed property with the bidding starting at 200k, we spoke to the agent and she told us that we should bid about 201K on the property (The closing date on the bidding is 5 days away in the middle of the holiday season - I personally think people will be to busy to notice it) ----- Would it hurt us to underbid on the property? We would like to bid 180 to 185K with an FHA loan. The surrounding property is valued at 220 to 258K.

4. Is it possible for me to place a bid, and my fiance to place a separate bid on the same property?

5. I know that their is a ten day period for personal buyers, but if my bid offer is rejected will the bank give a counter-offer or am I just out?

6. WE REALLY WANT THIS PROPERTY SO ANY GOOD ADVICE WOULD BE GREAT!!!!!!!!!!!!!!!!!!!

THANK YOU

Answer 1

I just will address bidding on the HUD home and buying foreclosed properties. As a Realtor, I am presently involved in bidding on a HUD home. After the bid has been submitted a copy of the purchased contract is provided. You need to review it thoroughly as it's does not include an inspection provision, so unless you have had the property inspected prior to making the offer, you are truly buying "as is". If you aren't successful in getting this home, I would suggest you look at foreclosures offered by FNMA or Freddie Mac. First, these purchases are not done by bidding. You submit an offer it's either accepted, countered or rejected if it's too low. The contracts contain an inspection period and if you don't like the results of the inspection you can cancel with no questions asked. When you submit an offer you must include mortgage approval or proof of funds. That said, whether you go with a HUD or FNMA/Freddie Mac home, low balling won't get the home. They have had the property appraised before offering it for sale, so they know the value.



The reason your Realtor isn't excited about foreclosed homes is, in mosts cases, the commission is less than a sale of a non foreclosed home. If that's you Realtor's attitude he/she isn't working for you. Find another Realtor.

Answer 2

I am going to try to answer in the order of your questions, but first thing you need to realize in bidding on bidding on foreclosures is that the bank is not going to let it go for much less than what is owed them unless there are some major problems. Everyone kind of misses the logic that most foreclosures are not on low loan to values. Most people, especially in this market, are not losing $500k properties that they only owe $250k on; they are letting go of a $500k mortgage on a house that is now worth $400k. The mortgage company prevents selling at loss by buying the property themselves at the auction and their agents are going to up the bidding to the outstanding loan balance so, even if you and your fiance are the only people bidding, the mortgage company is going to keep bidding until they hit the outstanding balance. Once they hit that, if someone is wiling to bid

above them, then it is a win-win situation to them.



1. While I never advocate co-buying a property unless you are actually married, if you feel/know with a 100% that the wedding will take place in a couple of months, as long as you both have good credit and minimal debt, it is to your benefit to be able to use both income sources. You will have to do a Tenants In Common deed instead of a Tenants in the Entirety with rights of survivorship but you can easily and cheaply change the deed to T by E after the wedding (mortgage companies do not care about this and will not even get involved when notified of the requested change by the court)



2. The realtor is more interested in selling a home on the open market because it is easier and more profitable for the realtor.



3. See my above explanation. If you know that the outstanding mortgage is lower, than go for a low ball but I would be surprised if the outstanding LTV is under 90%











4. You can both bid but you will be competing against each other so it doesn't make much sense. Place your offer based on what you honestly think the property is worth and for what you are willing to pay. People ( like most of the people underwater today) let emotion and hype override common sense and they end up offering to pay more than property is worth in order to win.



5. It will depend how close you are to their desired amount. Most decent lenders are not going to flat out reject a buyer willing to pay $200k on the property that they wanted $205k for but they won't bother with countering deals that they believe are so much lower than what they need to get

because experience tells them you are not going to immediately agree to their counter offer of $205k if you only bid $185k.



6. Best advice, figure out the value of the property and that includes any damages that you would have to pay for (and you would not believe what people who are being foreclosed on will do to a home-flush things down the toilets to back up the pipes, gash hardwood floors, I saw one where the people systematically cracked most of the ceramic tile in the kitchen so that each tile would have to be replaced). On the positive side, lender will let go a lot cheaper a property that they would have

to do expensive repairs. No such thing as a DIY lender but many DIY homeowners can make the necessary repairs themselves for a significant cost savings that the lender, who has to pay a professional time and material, cannot do.



If the property is in perfect (documented) condition and you find out the value of the comps, go maybe 5% under that.



EDIT- I did not know it was a HUD foreclosure and I agree with realtor on the items about the bidding process

Answer 3

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