Bidding on Foreclosed Property with Mobile Home
I was wondering if anybody had experience with foreclosure auctions? I'm thinking about trying to buy some property that is up for sale in a nearby small town. It consists of a nice size lot plus a late 90's probably 1998 or 1999 mobile home. Its what is commonly referred to as a "single wide" 14'x70'.
The mortage company says the only thing owed against the property is the mortage and this year's real estate taxes. Should I pay to have the deed researched to make sure? I'm seriously interested in the property but would hate to go to that expense and then not be the high bidder.
I know the general value of the ground in this town but really have no clue about the mobile home. Does anybody know some online resources? Figured to have a talk with the bank about it this week but would like some information before going in.
I know the place has been empty for over a year. Plus the family who lived there really wasn't known for keeping a tidy place. But since its a foreclosure there is not a chance to inspect the inside of the home. Because of the window blinds you can't really see in it either. From the outside it looks like, well a single wide mobile home. I did notice several places where the vinyl siding was damaged.
The plan would be to buy the place and clean up the property. The house would be fixed up or hopefully just cleaned up and then moved off the property. Basically I just want the ground but I'm worried about getting raped by the mobile home on it.
Re: Bidding on Foreclosed Property with Mobile Home
The thing to keep in mind is that mobile homes are not like regular homes. They loose value like a car and do not increase in value.
I would research the property to make sure there isn't any other liens on it.
I would also talk to a bank or credit union about it before I decided. Get an appraisal done. There are many differant types of appraisals, even a drive by appraisal.
Even though it is cheap doesn't always mean it is worth it.
Good Luck.
Re: Bidding on Foreclosed Property with Mobile Home
Never, ever bid on a home/lot without researching it thoroughly. It doesn't take much to pull title information on a parcel/tax id #.
If its a mobile home, its probably not worth anything...especially if its damaged. If you are just wanting the land and the cost is worth it...go for it. But, make sure you know what the VALUE of the land is MINUS the mobile home. If you are going to build on the land (make sure you can) and make sure that the value of the home you are going to build on the land is within reason for the market in the area.
Re: Bidding on Foreclosed Property with Mobile Home
Yeah, I "know" I should research the property and I plan on doing that but there is a difference between me doing the research and me paying the local title company to research it.
Well the mobile home may not be worth a lot but around here anyway its worth something. Right now I'm guessing around $15,000 based on what I've seen similar mobile home sell for. But without seeing the inside of it who really knows.
I know the general value of the ground, most of you ladies probably buy cars that are worth more. Not sure if I'd build on it or not, but I want the ground. Its a small town thing that would take way to long to explain. Thanks
Re: Bidding on Foreclosed Property with Mobile Home
^^^ just a few words about foreclosed property auctions which you won't read in the 'official prospectus' but which are usually true nonetheless ...
A. don't ever think that the financial institution that foreclosed on the property / repo'd the car or whatever doesn't know exactly what the market value of their 'property' is.
B. don't ever think that the financial institution doesn't have a long list of established contacts with property developers / investor groups / used car dealers / construction contractors etc. that usually provide a ready market for such 'properties'
C. therefore any 'property' that winds up going up for auction has already filtered through a fairly elaborate chain of value appraisals and 'insider' buying opportunities, without a 'favorable' deal having been made. Thus there's either something fishy with the condition of the 'property', the local market is already saturated with such 'properties' such that the open market resale value is depressed below 'fair' value, there is some extraordinary reason (like title / legal problems) that provide an incentive for the financial institution to officially involve local LE and an official public title transfer via auction, or something else is going on with the 'property' that probably makes the deal less desireable than it might seem on the surface.
Re: Bidding on Foreclosed Property with Mobile Home
And sometimes a pretty decent opportunity slips through the cracks...
Re: Bidding on Foreclosed Property with Mobile Home
Quote:
Originally Posted by
Deogol
And sometimes a pretty decent opportunity slips through the cracks...
right, but Melonie's point was that foreclosure doesn't mean good deal most of the time. That's important to mention because somewhere it got out that the best way to get a good deal on a house is buy a foreclosure. If the people "in the know" didn't want it, why not?
Re: Bidding on Foreclosed Property with Mobile Home
Thanks for all the replies.
The property was financed by Green Tree which is a lender that specialized in mobile home financing. Since its not local that could explain the "why" to your point "B" Melonie.
The real estate market isn't really booming around here and hasn't forever. There are a couple bigger towns in the area that have good development but in the smaller towns its not really happening. Which depending on your point of view may or may not be a bad thing.
I need to find out how much was owed on the property. The rumor is that it was more than the property was really worth. Which wouldn't surprise me. Why do finance companies make loans in small towns for amounts that the market really doesn't justify.
Definetly need to do some more leg work on this and quick to find a few things out.
Re: Bidding on Foreclosed Property with Mobile Home
Quote:
Why do finance companies make loans in small towns for amounts that the market really doesn't justify.
Well, the answer to that questions touches on several 'dirtly little secrets' re the subprime lenders. Can you 'handle the truth' ?
A. for a property with relatively low value, the cost of sending an assessor out to the stix for an accurate valuation may add up to several percent of the amount being financed. This is a significant expense for the subprime lender. As subprime lending standards (prior to the new guidance being issued anyhow) did not absolutely require an accurate assessment of the property value any more than they required an accurate assessment of the subprime borrower's income, subprime lenders opted to minimize expenses / maximize profits as a trade-off against accepting a bit more risk.
B. In regard to risk, subprime lenders were able to charge high enough interest rates that even if one in 20 borrowers went belly-up, the other 19 subprime borrowers' high interest payments plus the recovery value of the belly-up property kept the subprime lender from actually taking a loss. It has only been since the belly-up percentage of subprime loans has started to exceed the 5% level that these lenders are entering shaky ground re loan loss reserves.
C. Thanks to 'accrual accounting', in terms of 'this year's corporate books', guess what a subprime borrower who is late on their payments and who is incurring late fees represents to the subprime lender .... A GOLD MINE. Thanks to 'accrual accounting', subprime lenders were allowed to account for late payments as if they had actually been paid by the borrower, and were also allowed to book late fees as additional profit !!! It will only be when the borrower's loan completely percolates through the foreclosure/repo process and must then be written off as a loss that the actual total amounts of loan payments received plus the recovery value must be 'trued up' against the accrued amounts, with the lender then being forced to book an actual loss ... which most subprime lenders are doing everything possible to push into the next fiscal year !!!
Quote:
The rumor is that it was more than the property was really worth. Which wouldn't surprise me.
With a certain percentage of subprime delinquencies / bankruptcies factored in from the onset, statistically speaking, loaning out more money simply meant more profits for the subprime lender. There was also a large element of 'real estate always goes up' factored into the psychology of loan officers in recent years, meaning that rising property values would automatically 'cover' loans that were stretched thin re initial equity. I'm surprised that a mobile home loan would get the same treatment though, since these are generally considered to be depreciable a la auto loans.
Quote:
foreclosure doesn't mean good deal most of the time. That's important to mention because somewhere it got out that the best way to get a good deal on a house is buy a foreclosure. If the people "in the know" didn't want it, why not?
Yes, exactly ! Buying a foreclosed property at a Sherriff's auction certainly sounds like it has the makings of a bargain, but like all auctions the merchandise is being sold as-is. Therefore it's up to the bidder to ascertain for themself exactly what they are bidding on ! Rest assured that where foreclosed real estate is concerned, 'professionally trained eyes' have had an opportunity to look over the property far in advance of the decision to auction the property, and they have decided to pass (or at least decided to pass at the asking price floated by the lender) ! Occasionally, developers / contractors etc. will decide to sit back and let the property go on the auction block in the hopes that they can bid on it themselves and wind up purchasing the property at a lower price. However, this means that an average person attending the same auction is in fact bidding against professionals, and when the pro's drop out of the bidding it means that the average person has already bid more than the property is actually worth !!!