Foreclosure Question

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Submitted by Anonymous on April 19, 2007 - 6:43pm

I am looking to buy a foreclosure in the Midwest and have a question for the group. I'm a bit confused by the process, and ma hoping someone can shed some light on what may be going on here:

Home listed for 310k for 6 months, no sale. Home went into foreclosure and was listed on yahoo foreclosures as going to auction at a starting price of 265k last month. The assesor and sheriff have confirmed that there is a sale price from last month for 295k. ABM AMBO (bank/mortgage company I believe) now owns the house, and it appears that instead of being sold at auction it just went back to the bank. The sheriff confirmed that 95% of foreclosures here just go back to the bank and are then listed with a realtor. This home is now listed at 300k and I'd like to make an offer. The listing realtor, upon receipt of an offer, just enters it into a datbase and gets an answer in 48 hours. The market here, believe it or not, is fairly active.

-Is this a normal foreclosure process?
-What deal can I expect/offer should I make?


Submitted by 4plexowner on April 19, 2007 - 7:28pm.

You are buying a rental property and will be a long-distance landlord?

Bad idea in my opinion - owning/managing rentals is challenging enough when they are local

Another poster, I believe 'surveyor', will tell you otherwise - evidently he is having luck getting cashflow from distant properties although he is doing multi-unit stuff not single-family

I question whether the market is really 'fairly active' if the house was available at $265K but didn't sell

Any offer would have to be below $265K IMO

Submitted by juice (not verified) on April 19, 2007 - 7:50pm.

I'm living there, not in San Diego. Also, the price out of auction was 293, but it looks like the bank bought it back for that amount. I am confused why 95% of foreclosures like that go back to the bank, presumably with the bank actually buying it?

Submitted by surveyor on April 19, 2007 - 8:04pm.

cali money

There is a lot of california money flowing around the midwest right now, some of it is attributable to my group, although we usually buy multi's. I know a couple of people who have been buying duplexes there.

$250k seems a bit high for an SFR. The members of my group have been buying duplexes for that price around Missouri. My totally off-the-cuff guess for that foreclosure is probably $190k tops for it to be a good buy.

Of course if it's waterfront property or something, that about throws all estimates off.

Bad idea in my opinion - owning/managing rentals is challenging enough when they are local

Well, I am crazy... :-)

Submitted by juice (not verified) on April 19, 2007 - 9:00pm.

I just found out that this home is owned by Freddie Mac and being marketed through Home Steps.

So I assume that after it didn't sell at auction, Freddie Mac assumed the home. My research online shows that they do not counter offer - you make an offer and they either accept or reject it. And you can always make more offers.

Submitted by SD Realtor on April 19, 2007 - 10:07pm.

juice hope things are going well....

One thing that is usually consistent regardless of where you are in the country, is that there are people who know how to make money on foreclosures during down cycles. I think it is telling when a property goes to auction and nobody buys it and it goes REO. This tells me that the market is not ripened sufficiently.

Based on this fact, if this property went to auction and went REO because it didn't get bought, then I would sit tight if I were you.

Believe it or not you will come across a better deal if you are patient.

SD Realtor

Submitted by juice (not verified) on April 20, 2007 - 5:23am.

SD Realtor:

Thank you for the post - all is well with us out here. Weather is back to normal, so that is nice!

On this REO, it looks like the bank bought it back at auction (reverted back to bank) at 295k. Does this price have any bearing on how much the bank will then take for an offer? I understand that banks often set a price for themselves at auction that is high enough to avoid a loss to a low ball auction buyer, but not so high that they will have to pay proceeds to the defaulted seller. This bank then apparently just bought it at that price, 295k.

Also, this one is being sold through home steps, a division of freddie mac via a local realtor.

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