Buying a forclosed house?

Question

What does it mean when it says.....

This property is a Lis Pendens. This is the initial document filed by an attorney or trustee on behalf of the foreclosing lender that starts the foreclosure process. This 2052 square foot property has 4 bedroom(s) and 2 bath(s). The estimated loan balance is $4500.

What does that mean and what goes into buying a forclosed home? Do you pay $4500 + other fees? How does that work?

Answer 1

Not a chance that you're going to get this house for that low a figure.  That's not the loan balance.  That's the amount they are behind in their payments.  Expect to pay very close to current market value for such a property.

Answer 2

Im not 100% sure but either way it goes you are not going to be able to buy that property for 4500, the bank takes that property back and then sells it at market value. No the housing market isnt THAT bad yet to sell that size house for 4500, sorry.

Answer 3

This $4500 is of no consequence to you. It's just how much the owner is in arrears (default) to the lender. It's the lender's justification to proceed with the foreclosure.

Upon foreclosure, the bank takes control of the property and it goes up for auction at the county courthouse. The bank has a minimum reserve that is the low amount they'll accept as a bid. If they don't get any bids or no bids meet that reserve, they take possession of the property and list it for sale on the open market.

If you're interested in buying that property, get ahold of a real estate agent and inquire about it. They have access to the multiple listing service and county tax records that show exactly what is owed on that property and to whom (first trust deed, second mortgage, tax liens, etc.). Once you know how much is owed, you can work with your agent to determine how much the property is approximately worth (how much it would appraise for), which will help you determine how much you want to offer on it.

If the owner owes more than the property is worth, the bank has insurance to recoup some of the losses. The bank also doesn't want to hold the property, because they lose money on it every day (they want to sell it now and get their capital back for other purposes). So, typically, a foreclosure will list for less than the market value in order to get a quick sale.

But, be forewarned about foreclosures: the bank does not have to disclose anything about the property. It's up to the buyer to verify the condition prior to close of escrow (COE). And, if there are major problems that are not found prior to COE, the buyer could end up with a money pit that will cost them more in the long run than if they bought a comparable non-foreclosure property.

Answer 4

When you buy a foreclosure, you cannot get it inspected, and you assume any liabilities associated with the property. For example, if the previous owner owes $12,092 in taxes, YOU now owe $12,092 in taxes. Buying foreclosures is not all it's cracked up to be. It's not like you're buying a $515,000 house for $4,000.

Answer 5

So it was foreclosed with only $4,500.00 owing?  The bank will take the property back after Sheriff's Sale and then proceed to re-sell the property, but will more than likely ask much more than that.  They have the option to only ask for the payoff balance, but since it is such a small amount, I would suspect they will ask more.