I am thinking of buying a foreclosure house in Houston. Is there anything I should be careful of?
10 thoughts on “Is it a good idea to buy a foreclosure house?”
Leave a Reply
You must be logged in to post a comment.
I am thinking of buying a foreclosure house in Houston. Is there anything I should be careful of?
You must be logged in to post a comment.
Investing in foreclosures can be very lucrative. But you need to do more research before you jump in with your capital.
What kind of foreclosure, a government tax deed or is it a bank’s foreclosure? Texas has some laws that could hamper your investment dreams: ie, tax deed foreclosures for homestead properties have a 2 year redemption period where the original owner can come back and reclaim it. If it is a bank foreclosure, usually the sale is final.
Also, I suggest reading a book on foreclosures before you jump into it. Recommendation below:
from wt my aunt has said (she is a real estate agent) once u put a offer on the house, its yours, even if u change your mind so u end having to pay for it…..
just make sure it is something u really like and have it inspected
Yes, approach with caution.
– Title may not be clean. Get title insurance.
– There may be back taxes or liens on the property that you will be responsible for. Hire a good attorney to uncover this information.
– The former owner may have trashed the place, refuse to leave (is squatting) or come back later to trash the house. Why? Who knows, some people are just that way with the "if I can’t have it then nobody will" type attitude.
– The former owner may be able to buy back the property within a year at the amount you paid. It doesn’t matter if it costs you to move or if you’ve improved the place: you’re out on the streets! (check your state’s laws on this one as it varies)
purchasing a foreclosure can be a dream or a nightmare…depending on how the previous owner or renters left it.
make sure you do a background check on the property—are there any Liens or Back Taxes…if there are you will be responsible for them
have a property inspector go look at the property – inside and out. you will want to know what is wrong with the property and will it be a money pit?
find out what comparable properities in the area are selling for—also find out what the defaulted amount is…you can find this out at your local tax accessor office.
you will most probably be bidding on the foreclosure…remember high bidder wins and must present the money to the bank the day you are awarded.
many banks are not allowing high bid to win if the $$$ value is not even close to the defaulted amount…so find that out.
you may also want to talk with the trustee who will be running the sale…let him know you are interested and ask if there is anything else that he may need at the auction.
good luck 🙂
If you are buying a bank owned property (REO) there will be no liens that transfer to you. The seller will pay for a title search, but you have to pay for title insurance.
If you are buying on the courthouse steps there are some liens that will remain attached to the property. Most of that info will be in the public records at your county clerk’s office or on their website. A Tax Deed sale will sometimes have provision for the homeowner to redeem the property, local law varies. If it is a foreclosure it is yours as soon as you pay for it (usually you have 24 hours). If you purchase a foreclosure on the courthouse steps you will have to file for a Quiet Title, a legal proceeding that can take several months to complete and requires an attorney. The lender will bid up to the amount in default, plus their cost to foreclose. The lender will have an agent doing the bidding, and that person will usually let you know what their high bid will be.
If it is a bank owned property you will be able to have a Realtor show you the house, have inspections done, etc. If you are buying on the courthouse steps you will not be able to see the inside or have inspections done.
Having said all of that, I have purchased a bank owned home in the past and currently am waiting to hear if my bid has been accepted on another. The bank will not make any repairs, what you see is what you get. The first house I bought was purchased at just under half of what it would have been worth if it had been in better shape & I did a lot of work to the house before I sold it for three times what I paid.
Inspect the place very carefully.
I bought a foreclosed house to live in, and while i was redoing the place, i swore i would never do it again…but now when i look at all my work, i will definetly do it again.
Yes or no, depending on the home you’re looking at..! If you are going to an auction on a foreclosed home, keep in mind this is not a place for novices. The lender will have set a minimum bid. Lenders are trying to recoup the amount they loaned on the home, which at this time of the market can be more than the home’s worth. Investment groups oftentimes track foreclosures, and although you may see a bunch of homes going into foreclosure on a daily/weekly basis, very few are actually sold to a third party. Also, the homeowner has a chance up until a few days before auction to reclaim the property, and depending on which state you are in, he/she can reclaim it up to one year after the date of sale. So if you REALLY want the home, make your checks beforehand, do a title search to be sure it is free and clear, check for liens, to be sure you don’t buy into any along with the house, because there is no escrow period for a foreclosure at auction, therefore no opportunity to do due diligence and make your checks until after the purchase. Take a good, thorough look inside and out if possible. Figure out beforehand how much time/effort/money may be needed to make any repairs, because you are buying it AS IS. If the numbers work for you, go for it! Once your winning bid is accepted, you will be required to have money in hand to complete the purchase. Homes at auction that do not sell usually go back to the lenders, who then list the homes with local real estate agents as REOs, and are usually found in the MLS/your local home search for sale. You might have better luck looking at these, because Realtors try to make things work for all parties involved. Good luck..!
title and back taxes ..