So We're Looking to Buy a Foreclosed Home Post Auction


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I was wondering if anyone has ever dealt with the following situation: There is a house that we would like to buy and then renovate (via 203K loan). It's a foreclosed house that already went all the way to auction and didn't sell. That in itself is not uncommon. This means that we can now try to buy it (again).

The reason we didn't buy it at auction is simple: "Cash only." The starting bid was $19,000. The house needs the kitchen put back together, but otherwise isn't in too bad of shape. So what I'm wondering is this: Since it didn't sell at auction for $19,000 does that mean that I can offer up something like $20,000 and they'll take it? I've already been in touch with the selling agent and I know that they'll take a 203K loan offer if the house didn't sell at auction (and it didn't). The house was kind of big and nice and it's only 4 years old. Anyone have any experience buying houses after auction like this?

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No experience but I would say this....if the kitchen is all that needs to be done on it, why would you need 203K to do that? I guess I am just cautioning against a loan in excess of what you need. By the house by ALL means for $20,000....but then only take out a loan based on what you need. In an economy that is still on the rocks...taking out an excessive loan may prove to be a bad idea. You would be wise to pay an inspector to tell you if there are unseen problems plaguing the house first but for $20,000....wow....not bad.

Good luck!

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No experience but I would say this....if the kitchen is all that needs to be done on it, why would you need 203K to do that? I guess I am just cautioning against a loan in excess of what you need. By the house by ALL means for $20,000....but then only take out a loan based on what you need. In an economy that is still on the rocks...taking out an excessive loan may prove to be a bad idea. You would be wise to pay an inspector to tell you if there are unseen problems plaguing the house first but for $20,000....wow....not bad.

Good luck!

The walk-out basement was completely destroyed by flood and/or water leaking in. There are a number of things that have to be done to make sure that never happens again. Firstly, the landscaping is sloping towards the house instead of away from it. Secondly, just to be on the safe side we need to reseal the basement and basement wall from the inside and outside.

That's where the cost for renovations starts to climb. I want to be as sure as possible that the basement/first floor is never flooded again (if I can help it.) The house was originally a 5 bedroom 3 full bathroom house. 2 bedrooms and 1 bathroom were lost with the flooding and subsequent gutting of the first floor.

Since there are are ZERO appliances for the kitchen. So we would need to buy new ones.

Can probably put the kitchen back together on our own -- all the cabinets are there. But the tab for repairs we can't/don't know how to do on our own adds up pretty fast. Especially re-landscaping the yard and sealing the basement.

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Its a buyers market out there now. You can get homes, condos, townhouse for very little, but get them inspected, there can be many costly expensie, can u afford them??? Gettinhg a loan today is not easy you have to have very good credit .buyer beware, remmeber the movie the money pit?? u dont want that for sure.

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The walk-out basement was completely destroyed by flood and/or water leaking in. There are a number of things that have to be done to make sure that never happens again. Firstly, the landscaping is sloping towards the house instead of away from it. Secondly, just to be on the safe side we need to reseal the basement and basement wall from the inside and outside.

That's where the cost for renovations starts to climb. I want to be as sure as possible that the basement/first floor is never flooded again (if I can help it.) The house was originally a 5 bedroom 3 full bathroom house. 2 bedrooms and 1 bathroom were lost with the flooding and subsequent gutting of the first floor.

This all gives me pause. These renovations will take quite a bit of time to complete if you're doing them yourself, even if you have full days you can dedicate to them. I know that you and your wife have a baby on the way. I would be concerned about mold, and having a pregnant woman and later a baby living in a home with mold in the walls and in the air.

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This all gives me pause. These renovations will take quite a bit of time to complete if you're doing them yourself, even if you have full days you can dedicate to them. I know that you and your wife have a baby on the way. I would be concerned about mold, and having a pregnant woman and later a baby living in a home with mold in the walls and in the air.

The whole point of a 203K loan is that it enables you to get other people to do all the work for you. You get bids from contractors for the needed work, take those bids to the bank, they loan the money and pay the contractors once the work is verified, inspected and completed. You have to price all materials and appliances ahead of time, and then you get the money and then you have to prove that you bought it -- that sort of thing.

Eliminating mold in the basement would be a major priority, obviously. Wife's parents have some experience in that, and we'll be double-checking to make sure it gets done right, either by me or a contractor.

I don't expect it would take more than a month to get everything done that needs done. The crucial thing is that we MUST BE moved before the baby comes or there will be Hades to pay.

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I have worked in banking, and while I've never seen a house that didn't sell at auction, being in an area that has a housing shortage, they would most likely accept a $20,000 offer. Around here, they ask the beginning price to be what was left on the mortgage at the time of the foresclosure + fees, as opposed to what the house was appraised for. Besides, if they don't like that offer, they will make a counter-offer, and so on.

I have found that the most important factor in the resale of a house, in case you want to flip it, would be the school district.

Congrats on the new family member! Happy home shopping!

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I am a little skeptical. The land it sits on sounds as though it is destined to have future issues. Be sure, like the Primary song "The Wise Man", to build your house upon a "rock" or a firm foundation. It sounds like a "sandy" one to me (metaphorically). Before spending HEAPS on getting it all redone, I'd be very very cautious. If it has been flooded out once, is it likely to do it again? Get someone who is an expert to come inspect it.

Good luck! My experience with houses in the past has been that what looks do-able will probably take double what you thought it would. Just be careful. It may be worth it but I'd be very careful. There are LOTS of houses on the market for less than $200K that don't have any problems. :)

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if it didn't sell at auction can you offer less than auction price and then negotiate up and see what the real bottom price is for it?

as for the renovations be careful and get it inspected. around here i know major renovations have to be inspected and brought up to specific codes before they are deemed inhabitable again. that can get much more costly than what you think needs doing to be livable. granted the codes for public buildings are different but that is often the reason closed store fronts sit empty while new companies build new, or they are torn down entirely and then start over. that's cheaper than bringing the old one up to codes.

on the other hand ppl today don't seem to like to do any work, they want move in ready. which drives down the cost of those that need face lifts. you can get a lot more house for a much smaller price doing some work yourself. which can be a great deal for you in the long run.

good luck.

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With the cost to do all the repairs on the issues, why not just spend the money to buy a house that is move in ready?

Here's the scenario we're looking at. Let's say I get this particular house at $50,000 (just a guess) and spend $20,000 getting it all fixed up (that's probably a massive over-estimation of renovation costs) and water-proofing the crud out of that lower level. Well then we come out with:

$70,000 -- Built in 2006, 2240 square feet, 3 bedrooms, 2 full bathrooms, 3 car garage with a full walkout basement (which means that at some future point in time it can count toward the listed square footage of the house). Down the road, if we finish off the basement and you have 6 bedrooms 3 or 4 bathrooms and 4500 square feet.

We're not putting all our hopes and dreams on that house though. We actually have an offer in on another house which is, as you say, ready to move into. It is listed at:

$119,000 - Built in 2003, 1200 square feet, 3 bedrooms 2 bathrooms, 2 car garage. Partial finished basement (but not a walkout basement). There is only one window in the basement, and so that is the only place that an additional bedroom could be put in. One of the three existing bedrooms is pretty tiny and wouldn't work for an older child down the road.

Both houses are in the same small town, so there's not a huge difference from one neighborhood to the next. The second one is in a slightly nicer area and at the top of a hill (if you want to call ANYTHING in North-Central Illinois a hill). The first one sits directly next to a golf course (good for resale). It's a small town that's been around forever, so new construction is hard to come by. Most of what is up for sale was built in 1910 or so, with very little built more recently than 1980. The house that was up for auction is just a lot more house for less money. It might enable us to never have to move as our family grows.

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Ok, one chink in this whole dream plan. I checked on the auction house this morning, and it is not done yet with bidding. Bidding actually doesn't end until August 25th. So this Wednesday. The current bid is up to $34,000 and has not yet made the reserve. So, I am of the opinion that we wait to see what happens with the bidding before we start making serious plans about the whole thing. That and we wait to see what happens with the $119k house.

For those interested I am ready to give up on the auction house, it has given us too many problems already and we aren't even into it yet.

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Ok, one chink in this whole dream plan. I checked on the auction house this morning, and it is not done yet with bidding. Bidding actually doesn't end until August 25th. So this Wednesday. The current bid is up to $34,000 and has not yet made the reserve. So, I am of the opinion that we wait to see what happens with the bidding before we start making serious plans about the whole thing. That and we wait to see what happens with the $119k house.

For those interested I am ready to give up on the auction house, it has given us too many problems already and we aren't even into it yet.

Well how do you like that? The support representative said, "The auction is over. The house didn't sell." Perhaps they meant that it didn't sell on Saturday, but assumed that I knew the auction would continue for several days.

The house has given us plenty of headaches, which is why we're pursing other options. Those options appear to all be considerably more expensive for substantially smaller houses. But we'll see how it all plays out.

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