Anyone familiar with buying foreclosed homes?

[2QUIK6]

Anyone know what is involved with buying foreclosed homes by going to the auction on the courthouse steps?
I know you have to pretty much have cash in hand or a bank note saying you have the cash in an account.
But besides that, once you buy the house, do you have to evict the folks if they are still house squatting, etc.

What about taxes for capital gains on the sale of the house, or if this is a business is it treated differently?

 

[TURBOTWIN2]

What liitle I know is: watch out for other liens, financial, mechanic's (from construction or repair), possibly homeowner's accociation fees, back taxes from other taxing authorities. You need to do some research. I've heard of the foreclosed people seliing the house themselves to a third party who has a right to catch up the amount owed and get the house (after you thought you bought it). Sometimes the title is clouded and a lost long relative can take the house from you. Go in with eyes wide open and do your homework. I think I'd talk to some real estate people about and see what they know. Good luck, maybe watch those light night "infomercials"!

 

[we4turbo]

Do you have a house to buy in mind, or are you just looking to buy at the courthouse? Most of the time you are better off if you can deal with the owner (if they are willing to sell). I don't think you have to evict anyone, they should already be out, but if you rent it out at some point you will have to kickem out . As far a taxes you pay the tax when you sell the home if you have not lived there 2 of the last 5 years of ownership.

 

[tjthorson]

You need to do a title search. All states and counties are different. I work in DuPage county, IL. The auction prices around here end up too inflated because everyone thinks if its an auction, its a deal, and they bid them up.

I go to the county building and search the title all the way back as far as I can. Add up all the leins to figure out how much to offer. Remember, if they haven't been making payments - what they owe can actually be more then the original mortgage.

Around here, you need a cashiers check made out to yourself for 10% of your maximum bid price. then, if you win, you have 24 hours to bring back a cashiers check for the rest. Then, you have to wait a week or so for a judge to "approve" it. If you get some bleeding heart, liberal wacko democrat judge, she may feel sorry for the 15 illegitimate kids living in the house and deny the sale. Then, your money is tied up for 2-4 months while you fight to get it back. If they approve the sale, then the people have 15 days to get out. You have to PAY to rent the sheriff to go to the house for $250. Then you show up with your own movers ($$$) and have 90 minutes to clear the house out and put everything on the lawn, no more then 150 feet from the building, and accessible to the owners. YOU have to protect it from thieves and rain for 48 hours. After 48 hours, you then have to remove the stuff that is left or get fined. If it takes you longer then 90 minutes to empty the house, then you have to rent the sheriff for $150/hour longer. You cannot empty the house, or be in it (until after the 48 hour thing) without a sheriff present. Now, after all this, and trust me, the people have trashed the house because thats the type of trash they are, you get it.

IMHO, if you want to make money, you HAVE to get the house before foreclosure and it goes to auction. You and thepeople have many more options. Good luck!

 

[TexasT]

I'm Certainly no expert...

But I will throw in my 2 cents. I would find someone with experience doing this sort of think and ask if they will mentor you or let you 'work' for them in exchange for some of their knowlege and experience. This could be a 'double edged sword' of sorts as this person might just try to take advantage of you.

As stated above, keep your eyes wide open as there are many shady characters in the field of real estate. No offence, but in my opinion most(NOT all) real estate agents are barely one step up from a used car salesman.

My advice is to look into VA and HUD foreclosures. This is how the wife and I got our first home. It is more expensive but the 'hidden' stuff is brought out into the open. They don't want you to get foreclosed on.

Rich

 

[2QUIK6]

Thanks for all of the tips and things to look out for. A friend of mine has done this a few times, but he's not "experienced" by any means and has not ran into any real problems, he did do all of the title searches and lien searchs before hand as he had a list of properties that were up for auction before hand and had visited them before hand, don't know if that is the norm or not, haven't really had an in depth conversation with him about it. We may only concentrate on vacant land foreclosures too. The third party thing mentioned above is places like those "We Buy Ugly Houses" folks.
Just trying to get some ideas of what I might want to start doing when my current company fizzles out which might be later this year. We have several ideas and this was one we thought about.

 

[TexasT]

I see you are in Ft. Worth. You might try to look up the realtor we used. She was out of Euless or Bedford, but I think she pretty much covered anything in Tarrant county. She specialised in HUD properties. Her name is Carol Spratt.

Just comb the classifeds for FSBO that appear that the owner is in need to sell. Also things that the owner will finance. Check out the Rich Dad series of books, by Robert Kyosaki. He has some great info and ideas. Dolf DeRoos is another author on the subject. Many more at the half price book store. Check them out and arm yourself with information.

Rich