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Thread: Foreclosures on houses

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    Default Foreclosures on houses

    Anybody got experience on this? My best friend and I live together. She was telling me that her cousin is foreclosing on his house. Well, I always heard the bad thing about foreclosers was that people screw up the house. We were thinking of maybe trying to buy the house together. Place a bid of course and if it wins we'd get it.

    We know what kind of shape the house is in so we do not have to worry about any of that. We've lived together for 6 years now so we feel comfortable about living with each other. Neither one of us plan on settling down anytime soon either so it's not like we would get married next year or a guy.

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    Banned Melonie's Avatar
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    Default Re: Foreclosures on houses

    there are certainly a record number of housing units that are potential candidates for foreclosure. However there are a number of issues involved in making a 'bid' at a sherriff's foreclosure auction that you may or may not be aware of ...

    - you need to be able to post the entire cash value of your auction 'bid' on the day of auction. By implication, you also will need a paper trail showing that this money has a 'legal' origin.

    - you need to be prepared to immediately pay back property / school taxes owed on the property ( in addition to the successful auction price bid ) in order to get a clear title

    - you need to be prepared to immediately have repaired any existing problems with the house / property ( ranging from water to sewer to 'mold' to structural ) in order to receive a 'certificate of occupancy' such that you can actually move into the house.

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    Default Re: Foreclosures on houses

    not all areas require a Certificate of occupancy
    These days I like to count my money. I like to wash it delicately and iron it. Sometimes I dry it with some bounty to make it all nice and cuddly. I love my money... did I say that out loud?

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    Banned Melonie's Avatar
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    Default Re: Foreclosures on houses

    ^^^ true, but the basic underlying point remains ...

    from

    (snip)"The author of the Craigslist posting in Las Vegas made no effort to disguise his or her intentions. “Stripping House — Before Foreclosure,” the ad declared, offering potential buyers the cabinets and countertops, the sinks and toilets, the doors, the appliances, the sprinklers. Even the palm and citrus trees in the yard were for sale, with a catch.

    “You dig,” the author advised.

    In Nevada and other states hit hard by the housing crisis, stripping fixtures and appliances from homes in foreclosure has become commonplace. Craigslist, the Web site for classified ads, functions as a bazaar where stripped items are sold openly. Often, the stripping is not done by strangers. It is done by the owner, just before the bank forecloses on the mortgage and takes the property back.

    If that seems like a situation tailor-made for the police, it is — at least in Arizona, where the Federal Bureau of Investigation has used Craigslist to arrest a handful of people for stripping homes and trying to sell the goods, charging them with felonies under a state fraud statute.

    In other parts of the country, however, the police are stymied. As it turns out, several troubled states, like Nevada, have no specific criminal prohibition against stripping fixtures from a property before foreclosure. Mortgage contracts do prohibit such behavior, requiring that homes be kept in good order. But violating those provisions is a civil matter, not a criminal offense.

    “If the homeowner sells the components to the house while they still own the house, that’s not a crime,” said Officer Bill Cassell, a spokesman for the Las Vegas police.

    So too in Florida, another state swamped by foreclosures. Several prosecutors and police agencies there said that unless laws were modified, such behavior would have to be sorted out between borrower and lender in civil court.


    Even in Arizona, which has an applicable law and where thousands of homes have been stripped, convictions are rare. There, to make a charge stick, law enforcement basically has to catch people in the act, said Julie Halferty, a special agent with the F.B.I. in Phoenix and head of a mortgage fraud task force.

    “This window of time can be quite short,” Ms. Halferty said in an e-mail message. “Once homes are abandoned, arguably any number of people can get access and strip the fixtures.”

    Statistics on foreclosure stripping are elusive, and experts disagree on just how widespread the practice is. Yet even those who play down the number acknowledge that the problem is serious, particularly in housing boom-and-bust areas like central Arizona, southwest Florida and the Las Vegas region.

    “Clearly it’s happening, and it’s happening with some frequency,” said John A. Courson, president of the Mortgage Bankers Association.

    Banks are largely powerless to stop a homeowner determined to strip a property. Lenders can pursue such homeowners in court, but the expense and difficulty typically outweigh the gain."(snip)


    ... so in areas that don't require a 'certificate of occupancy', you can technically move into a house that no longer has functional plumbing, no longer has sinks and toilets, no longer has functional heating / air conditioning etc. If you're THAT determined to become a homeowner, then hey go for it !

    But where auction bids are made by people who intend to own and occupy the foreclosed property as a primary residence, something along the following lines probably applies ...

    Assuming a 'median' home that sold for $250k at the height of the housing bubble, you can probably be the successful auction bidder for $100k-$125k. Keep in mind that the banks owning the paper on the foreclosed properties know EXACTLY what the overall situation is on that property ... and will 'collude' with a professional 'redeveloper' also bidding at the auction if the price levels bid are way low.

    Exception of course is when the property has major structural, 'mold' or other problems that create a situation where the cost of making the property 'habitable' again become totally out of line with the market - a situation which the bank is more than happy to 'dump in the lap' of a would-be amateur bargain hunter. In other words, when you hear about a former $250k foreclosed house being sold at auction for $25k, what you probably don't hear about is the necessity of stripping every single piece of sheet rock / flooring, the necessity of replacing foundation walls or structural beams etc.

    Even with a collapsing housing market, there is no such thing as a free lunch. However, if the 'amateur bargain hunter' also has the necessary skills to provide their own 'sweat equity' towards making the property 'habitable' again, then indeed a monetary bargain can perhaps be had. But if that 'amateur bargain hunter' is going to have to rely on ( and pay labor costs for ) professional contractors, the overall financial picture that eventually emerges could still be ugly. And to aggravate the situation, much of this work is going to have to be financed in 'cash' because the recently (re)established collateral value at the bargain priced auction sale severely limits the availability of home improvement loans etc.

    ~
    Last edited by Melonie; 12-27-2009 at 09:53 AM.

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