Contact a realtor in the area you're looking at and they should be able to help you with a list of foreclosures.

Years ago we looked at the possibility of buying a foreclosure, and every one we looked at was trashed. I'm talking laminate peeled off the counters, a hole in every door that remained, vinyl pulled up off the floor, one house even had every window, toilet, sink, tub and plumbing fixture removed. People do tend to trash a house if it is being foreclosed on.

There are some nice ones out there, but they're few and far between and go fast. My son just bought one. The bank wanted to unload it quickly so they were dealing. The house was in very good condition, but my son had an inspection just in case, although the bank wouldn't fix anything on the list, the inspection let him know that the house was in good condition. In my son's case the power and water were on so plumbing and heating and a/c could be inspected. Many foreclosed on homes don't have any utilities on.

When dealing with a bank owned home you need to have lots of patience. They're notoriously slow. It was almost two weeks from my son's offer until the counter offer was accepted.

If you decide to go this route, definitely have the purchase be contingent upon an inspection. And be prepared to fix anything the inspection finds, because the bank won't fix it.

Foreclosures are bank owned and listed sometimes by a management company. They are very inflexible when it comes to price reductions for major fixes and usually not very willing to negotiate even on price.

If you can find a foreclosure, be very careful because it could have alot of problems because the previous owner didn't have the money for upkeep.

It's a common misconception that one can find the deal of the century by buying a foreclosure. Actually, you take a lot of risk and you're dealing with a major corp that is unwilling to negotiate.

This is a different era for bank owned homes, at least in the Memphis area. There are so many bank owned foreclosures on the books that the banks are trying to unload them like crazy.

The house my son just purchased was in excellent condition, only 3 years old and not trashed. The bank originally listed the home at $179,000 six months ago and eventually lowered it to $159,000. My son got it for $152,000 and the bank payed $6,000 in closing costs. The home appraised at $180,000 (2300 sq ft., 4 bdrm/2.5 bath) Banks in Memphis are dealing and I think that may be the case in any other area where there are too many foreclosures.

thanks for the info!!!

We bought a HUD house in Columbus. The only thing wrong was they took the kitchen floor and one light fixture. HUD paid all closing costs and we spent 129,000 on the house. We sold it 2 years 4 months later for 189,900. We paid almost a 1000 for floor, 50 for the light fixture, painted, and put up a fence for $2500. There are some good ones out there....it takes awhile to find them.
Working with them can be more difficult and take more time, but sometimes it's work it.

cpowers... the floor was missing??? Did I read that right??

sparksals....yeah, the vinyl, laminate....whatever was on top was gone. There was some old laminate under it and had a pink glue all over it. So we just had our floor put on top. It made the kitchen floor level with the carpet that way.

OK, let's back-up a bit here. There's some misconceptions happening based mostly on, I suspect, hearsay & rumor, not actual knowledge.

I was a bank work-out officer for a couple decades. I specialized in distressed real estate. First, not ALL or even the majority of foreclosed residential properties are "trashed". Yes, there are some & they get the attention. But, bad things happen to good people in this world & the vast majority of home foreclosures fall in this category. Somebody gets sick & the medical bills pile up, a job is lost & the new job doesn't pay but half of the lost job, and in today's world...the ARM has bumped 3% plus they suddently have found themselves having to care for an aging parent they hadn't counted on. These people do not generally "trash" their homes. What they do is come to my office crying & showing me pictures of their little child who is being treated for leukemia & they don't have medical insurance. And, I have to tell them how very sorry I am but the bank has to take their home away. It's heart breaking! I've been there so many times, I can no longer do the job. So, I am now retired after doing well over two thousand foreclosures in three states.

Also, banks can be slow but they most certainly are not ALWAYS slow to respond. Banks have dozens of Committees. It's just how they operate. A loan officer will have a "Loan Limit" where they are free to make decisions up to that amount. Over that amount & it goes to Committee. So, if you are making an offer that exceeds the bank's Loan Loss Reserve by a certain amount...the Loan Officer will have to take your offer to Committee & those committees often only meet once/month.

Here are a few suggestions for considering the purchase of a bank-owned (REO) property:

1.) Call local lenders direct. Side-step the Realtors. Ask for the REO specialist (or loan officer). Use the word "REO" so the bank receptionist knows who to transfer your call to.
2.) Do be prepared to do an inspection. However, it is a false that banks will NEVER do any repairs. So, certainly discuss this upfront with a lender who has a property you might be interested in.
3.) Banks are most assuredly interested in price negotiations. Forewarned though...most large lenders have some pretty qualified people doing the negotiating. So, if you're the sort of person who backs-off the minute somebody tells you, "No", then purchasing a REO might not be the best solution in your case. If you're a capable negotiator...fire right back at the lender.
4.) The lender is HIGHLY motivated to sell the property. they are not in the business to own real estate (even in JT's they do not take a lead position). Lenders have set what's known as a Loan Loss Reserve on each distressed piece of property. They know they will lose money...it's a matter of how much money they're going to lose. You, as a BUYER, can increase your chances of being successful by doing a little homework. Take yourself to the court house & look up how much the foreclosed mortgage was & when it was recorded. That will immediately put you in a better negotiating position presuming you already know approximately what the market value of the property is. Now, you also need to add the lender's costs to that mortgage...figure $10K pus delinquent interest (which lenders never expect to get back). Now, there are laws that prohibit a lender from just dumping a property. They have a fidiciary DUTY to the mortgagee. Example: if they have a property with a market value of $100K & a loan (including accured foreclosure costs of $40K...they CANNOT sell that home for $30K UNLESS that really is the true market value. Exception: If a lender has no intent on seeking a judgment against the mortgagee for any deficiency then they can sell the property for any amount they so choose.
5.) Some smaller lenders do list their REO's with local realtors. So, it doesn't hurt to call around & ask. But, again it's much easier, faster, & cheaper to deal directly with the lender.
6.) Purchasing an REO requires a lot of legwork on the part of the purchaser. Be prepared to spend some time doing what's known as "due diligence". In CO right now there are hundreds of homes available as REO's. Many of these properties are in good condition. Some are only a couple years old.
7.) Also, ask the lender to provide the end financing should you purchase one of their REO's. And...ASK for a reduced interest rate & no closing costs! You just don't get anything you don't ask for...I've done that to move an REO hundreds of times. It will, most likely, be a non-conforming loan for the lender & they'll need to keep it in their portfolio. Most are prepared to do that.

During times like we are in now, the rules change with lenders on a case-by-case basis. You might very well be told absolutely, "No", by a half-dozen lenders before you find one who's more motivated. Keep trying.

To be successful in purchasing an REO, it best if you don't have strong feeling about what you MUST have in a home. If you are willing to consider all options then purchasing REO can be a real savings. You can then wait for the market to turn & buy your 'dream' house. Don't expect to find just what you want in an REO property. They are what they are...maybe, it's only got 2 baths & you really wanted 2-1/2. So what? Maybe, it's got formica countertops & you had your heart set on granite. So what? If you can save tens of thousands of dollars...I say those dream features can wait until the next home purchase or you can change them. A lender WILL NOT change stuff like that for you. They MAY, however, be willing to correct major structural items your inspector finds. Negotiate smartly on those items.

Tricia

We bought a foreclosure acreage with an "executive" level home, in 2004. It was a beautiful house but the previous owner had punched holes in all the doors and many of the walls. Also, general upkeep had not been done. We never knew the original owners but from word of mouth, they weren't the "good people, bad situation" kind of story that triciae noted above. I won't go into details but we learned why he installed a remote control security gate and extensive security system in this home, after we got a few late-night visitors looking to purchase something we weren't selling... and after a good part of our backyard came up as a nice marijuana patch the next spring, clearly planted by someone previously.

Anyway, we got extensive inspections. Our offer on the home was adjusted downward by us in terms of the money we would need to repair the damage. We bought the house, which appraised for $425k (with the damage), for $320k. The bank was more than delighted to deal with us (our first offer was $300k and their counter was $380k; we countered at $320k and got the house). They also agreed to pay for extensive repairs to the septic system to get it up to code. It worked out great for us.

My experience with foreclosures.

We bought a VA foreclosure in 1996. They revealed everything that was wrong with the property. The guy that was foreclosed on was a nice guy, just not very financially astute. (he stayed in the neighborhood and we knew him...kinda weird, but there ya go:) We did the neccesary work over the next 8 years and made out very well when we sold it.

We put an offer in on a bank-owned foreclosure in February. It was an 5,000 sf 1885 former B&B in a desirable town offered at 317,000. When we went to look at it, there was the normal stuff, very dated kitchen, but usable, cosmetic defects and such, but we discovered that there was severe water damage in one of the els, about 1200 sf total. Best case scenario was it need to be gutted to the studs. Worse case, demolished. We put an offer in at 220,000 with no contingencies. (we had the preapproval from the bank for the mortgage) This was what the property was worth, given its present condition. They came back at 315,000, with them fixing the water damage. We didn't even counter. If I'm dealing with water damage and mold (which was visible) I want to do it myself and not put my trust in someone else to do it properly. I suspect that the bank that owns it (in California, the property is in Maine) is unaware of the extent of the damage. It is still listed today, after 3 price drops at 269,000. We would have gone to 250,000 and they wouldn't still be heating it.(It's been a cold April here...)

Hi bigglynals,

Foreclosures can be a good route if you're 1) handy and 2) a good negotiator, as triciae mentioned. If you are not a good negotiator, you can always use a realtor who is. But if you are not into fixing things up yourself or are very picky about what you want, it will be a depressing search.

In my experience taking first-time buyers to more foreclosed properties than I care to think about, most of the damage actually seems to occur after the previous owners are out. Around here (New England), about 80% of these had the heat shut off but for some reason never got winterized until weeks after it got cold. So pipes burst and walls and ceilings fall down, then serious nose-burning mold takes over. (ie, if you can smell the mold before you open the door, you probably shouldn't go inside.)

Around here you can also find foreclosures on realtor.com and other regular search sites. There isn't a search field for them specifically, but they can be recognized by the legalese where a description usually would be. (For an example, "Sold as is. Pre-quals on all offers. Any and all offers are contingent upon receipt of a fully executed and mutually acceptable Purchase & Sale agreement. Including any and all of the seller's addendums. The acceptance of good faith monies in escrow without an executed P&S Agreement does not bind the seller." ... and that was one where the bank hired a real estate agent to sell it.)

Good luck with your search! I hope you get a house you love!

jane d....

lol at the "legalese"!

And, I would add that the lender paid some attorney $2K for that CYA...rofl

During the late '80's & early '90's when New England was living through a lender's worst nightmare, I remember doing foreclosures so quickly that I couldn't get them all winterized as would be considered a "timely manner". lol

I remember one very cold day in January. Counsel & I did 14 foreclosures in one single, very long, grueling day. These were on-site auctions, standing in knee deep snow with the wind howling (hopefully at our backs & not in our face), & being utterly exhausted from the depressing task.

Some of my foreclosures experienced that bursting pipe syndrome jane noted! However, I would ALWAYS repair the property before marketing. If there was damage that constituted anything our counsel felt could be determined to be a "risk" factor...we ALWAYS disclosed the damage & the subsequent repairs to potential buyers.

Vandalism in empty houses is a problem. I tried very hard to on-site visit each of my REOs once/month but didn't always get to every single one. When damage was found, I had it repaired. Sometimes though, a potential buyer would be there for a home tour & we would discover the damage together. I hated that. It made my bank, and me specifically, look like idiots. Fortunately, it didn't happen too frequently.

Also, when considering purchasing an REO...ask for a Home Warranty WITH TEETH IN IT. Most lenders that I've worked for provided that voluntarily as a marketing tool but not all. So, ask for it. They'll gladly buy you the policy. They really don't want to own the property.

Tricia

Good advice, everyone. Tricia said to ask for a Home Warranty. What type and for how long?

I have to wonder if the condition also depends on the location of the house. Where I used to come from, the house trashing was done by kids, it wasn't a good area. Kids would see a vacant house, then see what they could get from it. In the area I'm in now, it's not a problem.

My old neighbor not only put money into his house but was bad with money. I'm sure that had he not sold when he did, he'd be out of a house. Would he take the dishwasher and kitchen cabinets? Probably if he had time. He could have reused them on a job.

With holes in walls, could be vandalism, could also be a pissed off home owner, that lost the house. Could also be someone with a violent temper, holes could have been there while they owned the house. One house my ex and I bought years ago was pretty damaged, it wasn't at the relo stage but would have been had their realtor neighbor friend not sold the house to their handy friend. I was glad we moved in when we did, fleas every where once my ex pulled the carpet. Took me 2 months to kill them all.

If I could buy a relo that was worth it I would. Depends on condition, price, neighborhood. (not in that order)

I'm relocating to Dayton from another state and was trying to do a local newspaper classifieds search and came up with a Sherrif auction's listing/link. They had tons of stuff listed, mostly a tiny B&W photo and who to call to see the property beforehand, often a realty firm. Apparently they were going to have a big auction 5 May. There were 207 listings although a few for weird things that popped up on the search inexplicably like Basset Hound puppies :)
Then on another county website looking for the assessors link - they had "Sherrif's" properties for sale. Not an auction but properties for sale. I'm assuming that these are properties outside city limits. Another place to look.
I was a little disappointed to see that the bottom auction price had to be at least 2/3rd's of the appraised value - no real steals I guess but I would also think that in Dayton getting some of these at the 2/3rd wasn't uncommon.

"I'm relocating to Dayton from another state..."

Rent for a year before buying.
No one is going to tell you all the details you need to know before buying in a new area.