Posted by jerry-IL on September 01, 2002 at 19:55:02:
Well, maybe I was penny wise and pound foolish. I had ordered a “tract search” and was told it was $150. When I asked for a breakdown, they said it included a lien search, a name search, a tax search and a case search. I asked, “what’s a case search?” and they said it goes into the foreclosure case and finds out what the status is and (some other gobbledegook that sounded like information I already had by way of the foreclosure list data). I decided not to pay the extra $50. If you were me, first thing Tuesday would you beg them to take the $50 and do whatever that search was? The “tract search” turned up nothing of interest.
NEVER THOUGHT OF ASKING: REO OR AUCTION? - Posted by jerry-IL
Posted by jerry-IL on September 01, 2002 at 17:32:21:
We’re talking about a foreclosure auction September 5th. If I have the cash to buy at auction for up to $10k over the lender’s opening bid, am I better buying it then and there at the auction or waiting to buy it as an REO? I had never considered the REO route because I thought that the lender will then be trying to sell it through a realtor for closer to FMV. Please help me adjust my thinking.
Re: NEVER THOUGHT OF ASKING: REO OR AUCTION? - Posted by Mike Stott
Posted by Mike Stott on September 01, 2002 at 18:28:21:
Jerry:
Bargains can be found at the foreclosure sale, as long as “rational” bidding prevails. Where I live, the winning bidder must put up 10% at the time of the sale (around 11am), then have the balance by 4pm that same day. This will take the non-cash buyers out of the competition, as they wait for it to become a REO.
However, be certain the foreclosure has been done correctly by the attornies representing the lender. The easy way to do this is to have a title abstractor or closing agent look at the title and foreclosure file. (VA insured loans are common to have messed up title at foreclosure sales, especially if the owner is deceased. VA will pay the lender regardless of the title, so why go through additional steps to complete the foreclosure correcly.)
Summary: 1) Have a maximum bidding price set before hand, & 2) Have the title checked.
Re: NEVER THOUGHT OF ASKING: REO OR AUCTION? - Posted by TKP, Houston
Posted by TKP, Houston on September 01, 2002 at 18:22:04:
Hi Jerry,
You are right. Most loans are serviced through a loan service company on behalf of the lender. Their service agreements usually requires that if they end up owning the property after the auction they have to go through all kinds of loops. And they will in most cases sell only through an agent. REO people think differently than the rest of us. Even if you, five minutes after the auction, offer them full price their service agreement will preclude them from selling. They will most often have to go through a broker and the 6% brokerage fee is not considered an expense, even though it cetainly is. The large companies budget for a certain amount of loan losses, and as long as they stay within budget everybody is happy, and nobody is willing to “rock the boat” by doing anything outside the norm (like selling directly to you) even when it makes financial sence. However, if the lender is a local bank you can walk in the day after the auction, or even the same day, and make a deal.
Do not discuss terms or price with the banker before the auction, that could be construed as collusion, and get both of you in trouble. But you can let the banker know before the auction that you are interested and set up an appointment for after the auction, so that the banker doesn’t sell to somebody else. If you have the cash go to the auction you can bid one dollar over the bank, and you might well be the highest bidder. Good luck! TKP, Houston