Mauti Meredith Scoggin's newest feature! A series of Real Estate related videos to answer your Real Estate questions. If there is anything you may have a question about that you would like for us to produce a video for and answer the question for you, please let us know by emailing debbie@mmsre.com.
If a Bank Buys a Home Back at Foreclosure; May I Approach The Bank The Next Day To Purchase The Home?
If the bank purchases the property back at foreclosure sale, then yes you may immediately contact the attorney who purchased the property for the bank. You may then attempt to give the attorney your contact information to pass along to the bank's asset manager or you may ask for the bank's contact information, as you are pre-qualified and are interested in purchasing the home. However, in most cases this is not a good way to go. The attorney is leery of giving out any information, as well they do want the responsibility of passing your information along. Therefore the easiest way to go; is to have an abstract or title search pulled from the Clerk of Court's records, obtain the mortgage lender's contact information and approach them directly. Absolutely make sure you are pre-qualified to purchase, (be realistic about offer price too) and also be aware the Seller will probably want to pre-qualify you as well. Which will hopefully give them the option of turning a bad loan back into a good loan…
Beware, this property will be coming onto the market. This asset is a black mark on the bank's books and they will want to move it as soon as possible. Your window of opportunity from the time the bank takes it back at foreclosure sale, until the property is listed on the market could be as short as two to three weeks…
For more information please call, 985-867-8670, or email us at marc@mmsre.com.
Thank You
Marc
Link to Jefferson Parish Judicial Auctions and Sales
This information has been requested from me several times, therefore I just wanted to make sure it was easily available.
Jefferson Parish Louisiana Foreclosures
Thank You
Marc
St Tammany Parish Leads State in Foreclosures – The Times Picayune
Attached is a link to an article by Benjamin Alexander-Bloch with The Times Picayune, which was originally published Sunday October 24th, 2010.
The Time Picayune and NOLA.com
Hope everyone gets a good look at this. It it really great to be in the newspaper and not be listed under the arrest warrants. 🙂 Just kidding… I want to thank Benjamin for including me in the article.
Thank You
Marc
St Tammany Parish Louisiana Foreclosure Sales
Briefly, I want to mention the number of scheduled foreclosures, week to week, for St Tammany Parish is still on the rise. In the weeks ahead we will see numbers rise above 50 per week. To put this in perspective when we first began following the sales in late 2006 / early 2007 the average numbers were 20 – 25 per week. In 2008 this number rose to 30 – 35 per week, and in 2009 to 40 – 45 per week. Now we are in the 2nd quarter of 2010 and we are seeing over 50 per week. Not to be a pessimist, but we are not through this mess yet.
Thank You
Marc
St Tammany Foreclosures vs St Tammany REOs
In our current market, in St Tammany Parish, LA, there has been an increase in both of these types of investment opportunities. Foreclosures and REOs. This post will explain the differences and compare the pros and cons of purchasing potentially the same property.
I believe St Tammany Parish is weathering this mortgage / economic crisis better than other parts of the country. I believe we are in the better half on this thing, and this is a good thing. I know the number of foreclosures has risen significantly in St Tammany Parish over the past 2 years, because I have been keeping an eye on them at every sale. In accordance the number of REOs has risen on the market as well, almost tripling in number in less than a year.
One of the main reasons for this is the market is upside down. Many people currently owe more on their homes than what the home is currently worth. Mortgage companies who are FDIC Insured are required by law to bid at the foreclosure sales, and from what I am seeing, in many cases (80% plus, right now in this market, 2008 – 2009) they are forced to overbid the current market value on these properties.
For example; the writ amount is 175K, but the home is currently worth only 155K. The bank, due to FDIC Insurance, is required to bid 165K, even though the home is only worth 155K. Hence, you as the purchaser are not going to pay $165,001.00 for a home which is currently worth 155K.
Simply put the market is upside down and therefor there is a greater number of foreclosures, but the dark side is many of these foreclosures do not have any equity in them, due to over financing.
When a property is purchased as a foreclosure there is no ability for the buyer to negotiate purchase price. It is an open public auction with the bank making sure they get as much of their money back as they can. As well the properties are sold "AS IS", and the purchaser is not allowed an opportunity to inspect the property for hidden or latent defects. This puts the purchase at greater risk. Lastly, at a foreclosure sale, title insurance is not provided when you make your purchase.
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When a property is purchased as an REO, the purchase is a standard real estate transaction. Allowing for inspections, renegotiation, and title insurance. The purchaser of an REO is allowed to negotiate sales price both, in the initial offer / counter-offer stage, and again before the expiration of the inspection period. This also allows for the purchaser to walk away from the purchase if he finds too much damage in the home, during the inspection period, and does not wish to renegotiate.
Title insurance is provided in many cases by the sellers of these REO homes. However, even if not, you as the purchaser are able have title insurance added to the property at closing. The bank will require a lender's policy, and in some cases pay your policy as well, or if not then you will be offered the opportunity to purchase title insurance and I will always recommend it. Title insurance is protection for the purchaser.
Basically when you purchase a foreclosure you are putting yourself at greater risk, if only for the inability to inspect the property. In my opinion, a standard real estate transaction is a much safer, more secure way for someone to purchase a home.
If you have any questions, please post or email.
Thank You
Marc Pellettiere
St Tammany Parish Foreclosures 101: Appraisals
When you purchase a home at a St Tammany Parish foreclosure sale, you have two options. You can pay cash the day of the sale, within a few minutes of your purchase, or you may pay 10% the day of the sale, within just a few minutes of your purchase, and then you have 30 days to pay the remaining 90%. Now understand there are exceptions to the rule. Some foreclosures require 100% of the final sales price at the moment of adjudication, basically within a few minutes of your purchase. There is not an option to pay only 10% and then pay 90%. So listen carefully, for the Sheriff's Officer will call it out before the sale.
Now this post covers Appraisals. If you go the route of only paying 10% of the purchase price, and financing the remaining 90% within 30 days, whomever you go through for financing is going to require an appraisal on the property. They require this to protect their interests. To make sure the asset you are purchasing is worth the money you are borrowing. Due to the fact you have only paid 10% down on the purchase of this property, you do not have legal access to the property and in turn neither does the bank nor the bank's appraiser. Simply put, the bank will not like that. They will feel they cannot get a true valuation of the property without access, and some banks will turn down your purchase for this reason. Make sure you clear this with your financing company prior to bidding.
Understand as well, the appraisers the Sheriff's Office subcontracts out too, when an appraisal is ordered on a foreclosure. These appraisers are not allowed access to the properties either, therefor the numbers seen on the day of the sales, may not accurately reflect the current condition of the home. I have no doubts the appraisers put forth their best efforts, but these appraisals are done from the street. Verify all information with your own eyes if you can. Pull your own separate numbers in comparison. It is for your protection.
The appraisal of a property scheduled for foreclosure can be obtained from the Sheriff's Office the Monday before the sale. 985-809-8036, but make sure to have the Sheriff's sale number of the property. (IE 2009-1234X), the address will do no good. This is not how the Sheriff's Office keeps track of the sales.
If you have any questions, please post or email.
Thank You
Marc Pellettiere
St Tammany Parish Foreclosures 101: Valuation
Value is key. Why are you buying a property at foreclosure? So you can get a deal, save some money. The purchase of this foreclosure is a value. What this means to you is you have got to know your numbers. Research taxes with the St Tammany Parish Assessor's Website. This will at least give you a current value according to it's assessment.
Get with a Realtor. We can pull numbers of sold homes, especially recent sold homes, within the last 3 – 6 months, allowing you to have your finger on the pulse of the local market. With today's technology, and the simple use of email. A line of communication can be set up allowing for instant access. Please Visit our Website, or Email us if you have any questions about our services.
Through the use of a Realtor, and the researching of comparable solds, the current market value of a home can be determined. Using this information, as well taking into account the current condition of the home and the necessary remodeling needed, through your best inspections. Over quoting is best when you are determining your numbers. Do not get on the edge of making money. You do not want to just break even on this investment, and understand, there will be unforseen events, plumbing leaks, past termite damage, mold issues, in rural areas possibly well and septic. Just be careful. You want to make money. Do not be afraid to walk away from a deal. There will be another.
If you have any questions, please post or email.
Thank You
Marc Pellettiere
St Tammany Parish Foreclosures 101: Research the Title
As far as I am concerned researching the title on a foreclosure in St Tammany Parish is paramount. Beginning to end, a title preparation and exam is a maximum expense of $225.00, through any one of many Title companies, and / or attorneys listed in your local phone book. ($175.00 or so is about average.) Needless to say, if I am looking to spend $10K on up for a foreclosure in St Tammany, believe me when I say, I make damn sure I research the title prior to bidding at the Sheriff's sale. Average sales range much higher than 10K.
The Sheriff's Office gives a "quitclaim" deed to the purchaser of any of the foreclosures at an auction. This quitclaim deed simply states, "any and all interest I have in this property, I convey to you without warranty." What this means to you is; if there is clear title on the property when the Sheriff's Office receives it, then the Sheriff's Office will convey clear title to you, as the Purchaser. However, if there is muddy title on the property when the Sheriff's Office receives it, then the Sheriff's Office will convey this same muddy title to you, as the Purchaser.
In theory you should receive clear title to a property when you purchase it at foreclosure sale. The reasoning behind this is, when the property was originally purchased, be it 2, 5, or 10 years ago. The mortgage company, at that time, required the buyer to purchase title insurance, even if it was just a lender's policy, the title was good at that time. However, have a professional Abstracter, and Title Attorney, research and review the title on any property you are looking to purchase at a St Tammany Parish, LA Foreclosure sale. This is my best advice.
IF you have any questions, please post or email.
Thank You
Marc Pellettiere
St Tammany Parish Foreclosures 101: Inspections and Due Diligence
One of the first things when it comes to foreclosures in St Tammany Parish is "Legally the property is private property until the Sheriff sells it auction." However, if you elect to go the route of only paying 10% the day of the sale and pay the remaining 90% within 30 days. You do not have legal right to access the property during the 30 day period either. As well, you as the purchaser, do not have the right to start eviction proceedings against the occupants until you pay the remaining 90%.
To back track a little, prior to the Sheriff's auction, since the properties are considered private property, you as a potential buyer, are not allowed access to the properties at this time either. Legally you are trespassing. Some of these homes are going to be listed with real estate companies or listed as for sale by owner. In these cases you can set appointment times to view these homes, though you may not get the chance to thoroughly inspect the property, you will get a chance to view the interior, to see what remodeling work will need to be performed on this property, including, but not limited to electrical, plumbing, roof, well, septic, as well the minor issues of flooring and paint. Look for termites. If you have a friend in the construction field, bring them with you. Have a pair of binoculars to inspect the roof and stay standing on the ground. Bring a camera, make sure to take pictures of damage, bring a notebook as well. Make sure you have a good flashlight on you, as well a measuring tape and a small toolbox with at least a pair of screwdrivers, for the little extras when needed.
This is just a start, but the name of the game here is CYA. Yours is the one that is on the line when you purchase a foreclosure. Just make sure you cover your bets. Inspections is only the beginning. Title and Appraisal can come into play significantly as well. Make no mistake, there are no givebacks when it comes to foreclosure sales. Perform your due diligent research.
If you have any questions, feel free to contact me.
Thank You
Marc Pellettiere