Buying a Foreclosed Home (REO) From the Bank
BySo if you’re just tuning in, I’m re-tracing my steps on an acquisition of a rental home in Charlotte, NC for your Single-Family-Home Investing Pleasure!
Step 2: Tell your agent what you’re looking for. Make your specifications as specific or general as you need to, in order to get a reasonable number of high-quality listings.
Consider asking for:
- Properties in a price range that they will rent out with positive cashflow.
- Properties in neighborhoods that are appreciating.
- Houses that may have a motivated seller – such as those that are bank owned, heading toward foreclosure, part of a rental portfolio, estate sales, in need of TLC or advertising a possible short sale. Have your agent search the “comments” section of the MLS listing to find out about this.
- Properties that need repair OR that are in good shape, depending on whether you’re ready for a rehab project.
My realtor, Tanya, probably sent me 100 SFH listings, plus duplex listings and condos/townhomes. I looked through everything she sent, reading the comments, looking at the prices, calculating cashflow, etc. I gave her about 20 homes that we were interested in and asked her for more detailed information about comps and rental rates. I wrote offers on half of them and ended up negotiating to contract on one.
The contract price on the house I decided to buy in Charlotte was about 75 cents on the dollar – $134,000 and the home will probably need a few thousand dollars in repairs to be done.
After signing my life away to comply with all the bank’s As-Is addendums and the like we are moving forward.
Next time I’ll write about the due diligence (whee!) and some of the details of what happens after we go under contract.
Popularity: 12% [?]
Related posts:
Subscribe to my blog and get a bonus copy of my book - Keep The Change - 25 Tips That Make 'Cents' For Your Financial Future!
4 Comments
January 9th, 2008 at 2:17 pm
Emily,
So tell how you had the home checked out… to feel confident with your expectations of “a few thousand” dollars? Hoping there is nothing hidden there…
I was a builder for 15years before changing hats, and I still want inspections:) Which generally keeps me away from foreclosures. Good tip on the Comments, thats the only place you can find it in the Charlotte MLS…do you know of Realty Trac? Tha is the very best source I know of foreclosure info. Terry
January 19th, 2008 at 8:57 pm
Hi Terry,
Great question… in this case, I’ve had 3 opinions of what needs to be done…
First – the realtor went out and did a visual inspection. She works with a lot of investors and has a sense of what needs to be done. In this case, she gave me a punch list and photos of everything she spotted.
Second – I paid to have a professional inspector go out and look at the property – for $350. Post to Pillar Inspections in Charlotte- if you’ve heard of them? Anyway, he did all the regular investor stuff of checking outlets, appliances, looking at roof, foundation, etc. and took even more pictures.
Third – I had a handyman go out and give me a bid and price out all the tasks separately. I gave him a copy of the inspection report and told him to go and do a visual, too, so that if he found anything else he could put it on his list. Obviously, he’s incentivized to find as many things to fix as he can.
So… that’s what’s happened so far. I feel pretty good about it. What do you think? Am I missing something here?
Emily
January 19th, 2008 at 8:58 pm
Oh.. I forgot to ask you about realtytrac.com… I’ve heard of it, but never had a paid subscription. How do you use it?
Emily
March 20th, 2008 at 11:45 am
[...] those that missed it, you can read Part 1 and Part 2 here. I promised to pick up with a discussion of the due diligence that went into researching [...]