Submitted by illusiveconsistence t3_1279je5 in personalfinance
I saw a 200K-300K USD property at only 20-30K USD. How is this possible and how does it work?
If this was possible then wouldn't everyone do this instead of pay for rent? What's the catch?
Would I owe those taxes? Additionally, if it is heavily damaged, is it still worth it if I get a whole house for the price of a year's rent?
As kindly as I can put this - if you can't do your own research sufficient to answer those questions (especially the second, which is extraordinarily subjective and for which you have provided no baseline for your skillset with regard to repair), then you're going to have a bad time.
Don’t do it man. No offense but your knowledge seems super limited. Educate yourself on this process a ton more than think about it.
Yes, you paying the outstanding taxes will be part of the purchase terms.
Depends on how much work it needs. It might cost you the equivalent of a house to repair.
Angry cops on YouTube has a series (this old crack house) where he buys one of these houses. That might give you insights at a possibility of what’s in store
It’s usually the starting point for the bidding, not the price
In the Seattle area, there is something very wrong with that house if it's going for 200-300K.
Lol right a couple pallets and a tarp under I5 goes for 175k easy
Uhh op is saying 20-30k if I’m not mistaken
WOW I really misread that. I doubt you can find anything in the state of WA for 20-30K let alone puget sound.
Yeah that’s at least the cost to bulldoze alone, no way it’s as simple as it seems.
From what I understand, on some sites the price listed is either what's still owed on the house, or the last price it sold for. It's an effort to grab your attention and likely not the price you'll be paying. Foreclosed properties are auctioned, so highest bidder gets the house.
For example, my house recently got foreclosed on. I fell ill and wasn't able to make the payments. There's nothing wrong with it. It's in great condition. The bank I had my mortgage with sent me an estimated value of 212k after inspection. However, it's listed on foreclosure sites at 156k, the price I bought it for.
If I'm not wrong, the bank knows what it's worth and will likely do all in their power to get the bid up close to the 212k price tag to get the extra 50k profit. Maybe I am wrong, but as long as they do it legally, why would they not?
The bank doesn't get to keep the extra 50k profit. They have to give it to you. So they don't care if there is any profit at all. They just want to clear the loan and be done with it. Why wouldn't you sell the house before they foreclosed? The only reason to ever let the house go back to the bank is if you can't make payments AND you are upside down on the house.
Essentially, yes. I have an illness that makes me unable to do most things, including not being able to communicate clearly or effectively most of the time. At the time I still needed 12-16 hours of sleep a day, and was so foggy headed I couldn't make the connections I needed to be able to do that. I could barely write a response email, let alone research and reach out. It wasn't guaranteed that I was even awake at a reasonable time. My "friends" at the time were conveniently too busy and my family was all too lazy to help. I asked for help, which was about all I could do at the time, but I didn't receive it.
Yes I've made improvements now, but it's all too little too late. I can read and write better now, but it's not guaranteed on any day. I'm still disabled physically, I spend most of my time in my bed, and disability payments take years to come through. I managed to keep forbearance up for two years instead of one because of COVID, and that was after all my savings were drained.
Believe me, if it was a possibility, I would have.
Having just scratched the surface of a neglected house, the only time I would buy a foreclosed one is if I planned to tear it down and put in a new foundation.
Two words will ruin your life: Water. Damage.
Usually some combination or all of the following:
You have to examine each house on a case-by-case basis to see what the condition is and what the flaws are.
Some former owners had to give up the home because they couldn't pay the property taxes.
If you find a home in relatively good shape that only needs minimal repairs, it might be worth the investment for you to live there or get income from it as a rental property.
The best case situation is probably that the property has been condemned or should be and the only reason it hasn't been torn down yet is that it costs money to do so and they'd rather pass that cost onto someone else.
At that point, consider the cost of the land and the cost of demolition to see if the listed price matches up.
Often that’s the starting price for auction. If you win the bidding you need to be prepared to pay the price the same day.
[removed]
[removed]
[removed]
Not Seattle, an example of one of the low houses in my area when I was looking at the same. The house had been abandoned for an undisclosed amount of time. There were no doors, and the house had some graffiti, but the copper seemed like it was still there from what was visible. The sale was all cash on the close of the auction. Because the house was exposed to the elements you were buying the land in the neighborhood and hoping to scrap as much as you could while you removed the entire interior structure and roof of the house. It still sold for twice starting price.
I’m one of the lucky few I guess. Our house was listed 80-90k less than its value on a random auction site. The listing company was from out of state and probably had no idea what it was really worth. Great neighborhood and great school district. 10 years later we still live here with a shit ton of equity. Nothing was wrong with the house besides a really overgrown lawn and hideous landscaping and the inside needed a fresh coat of paint. We had to buy it as is without radon/inspections but it worked out amazingly in our favor. We took care of the radon after we bought. We have no regrets. Best financial decision we’ve ever made.
Because they require more down payment…and it’s fast moving. You can’t ask the bank to fix anything, it’s sold as is…you can inspect it, but really nothing you can use to lower the price. I also heard that it’s hard to get lending for these type of homes, but I could be wrong (once I heard you had to buy the property outright).
[removed]
Make sure it is not a second mortgage or HOA foreclosing. After the GFC we use to see people that think they got a bargain and then found out there was a first mortgage they had to pay off.
Foreclosed homes are generally sold at auction where investors and unethically the banks will bid up the prices. Also, transaction occurs once auction is completed. It is possible they could be sold by a “wholesaler” who bought at auction and added a couple grand for profit. Lots of ways this could go down these days especially after the last bubble/crash.
To add a little to this post. The lien holders typically bid the price to whatever they are into the property for. This allows them to be made whole if someone buys it. It has to be a really crappy property for this not to happen.
theoriginalharbinger t1_jed8okb wrote
The catch is that they're either heavily damaged, massively in arrears on taxes, or that this is a marketing ploy, or some combination thereof.