Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
I was looking through some foreclosure homes and I am noticing some homes that were victims of mortgage fraud - ie bought for 100k over comps in the area in '05/06. Also, I suspect some of them have a fraudulent tax assessment as well (again, close to 100k more than comps in area).
However, now since they are bank-owned the asking price is so low it is hard to say no for investment. What are the pros/cons in a transaction like this? I do not want to put my money in a pit to be lost. The homes are in up and coming neighborhoods and I see lots of potential in maybe the next couple of years.
Anyone have insight or experience with this? What would the realtors reccomend?
I was looking through some foreclosure homes and I am noticing some homes that were victims of mortgage fraud - ie bought for 100k over comps in the area in '05/06. Also, I suspect some of them have a fraudulent tax assessment as well (again, close to 100k more than comps in area).
However, now since they are bank-owned the asking price is so low it is hard to say no for investment. What are the pros/cons in a transaction like this? I do not want to put my money in a pit to be lost. The homes are in up and coming neighborhoods and I see lots of potential in maybe the next couple of years.
Anyone have insight or experience with this? What would the realtors reccomend?
Thanks,
Chuck
the best thing to do is get a good real estate agent who is familiar with the precise area you are searching in
most realtor have a small area they work in mostly....their "home court"
find that agent ...she can tell you everything about the area including the last time someone spit on the sidewalk
Even as a realtor unless I knew exactly the house you were speaking of and the neighborhood I can only give you an educated guess
just MHO
Chuck, just as there were/are many angles by which to defraud the builder, lender, home buyer, etc. in these transactions, there will be similar folks who look to make a buck on THIS end of the line---turning over foreclosed properties. I CAN tell you that Atlanta ranks at the top of any list of mortgage fraud, foreclosures, shady lending, buyers overstating income, TV house-flippers who never sold a house, you name the category.
Careful that you don't get involved with a builder who has CEASED operations as some have, leaving partially completed properties and home-buyers out to dry. You might be able to Google news stories about the market...been something in the local papers every week. Good luck!
Chuck, just as there were/are many angles by which to defraud the builder, lender, home buyer, etc. in these transactions, there will be similar folks who look to make a buck on THIS end of the line---turning over foreclosed properties. I CAN tell you that Atlanta ranks at the top of any list of mortgage fraud, foreclosures, shady lending, buyers overstating income, TV house-flippers who never sold a house, you name the category.
Careful that you don't get involved with a builder who has CEASED operations as some have, leaving partially completed properties and home-buyers out to dry. You might be able to Google news stories about the market...been something in the local papers every week. Good luck!
actually we have fallen to #4 which isnt good either but at least we don't get the award for that
#1 - pay to turn the water on & off again and get it inspected - by an electrician, a plumber, a roofer & a HVAC specialist - yes, it costs more.
I have seen properties where owners leave in the middle of the night - or according to neighbors, have been arrested...not pretty. One house in my neighborhood sold for $630,000 - $70,000 in CASH to the buyer - never paid their mortgage - he was arrested. They didn't pay the electric bill. So that was turned off before the water was turned off. Last year we had two big snowstorms in December - and the winters in Denver can be frigid.
It is now for sale at $515,000 by the bank - with all new appliances - but, the water will probably leak all over when it's turned on. There was another in the same neighborhood - a former model. He was transfered and when he couldn't sell in 4 months for the first & the second plus closing costs, he did a deed in lieu of foreclosure - moved out and they sold it for $550,000 - plus the bank paid to repaint the exterior.
Now the Realtor that the owner used put the property in with a finished basement (yes it had permits) But the bank's Realtor did not mention that the basement was finished. Do you think the bank could have gotten more if was advertised that way?
I was looking through some foreclosure homes and I am noticing some homes that were victims of mortgage fraud - ie bought for 100k over comps in the area in '05/06. Also, I suspect some of them have a fraudulent tax assessment as well (again, close to 100k more than comps in area).
However, now since they are bank-owned the asking price is so low it is hard to say no for investment. What are the pros/cons in a transaction like this? I do not want to put my money in a pit to be lost. The homes are in up and coming neighborhoods and I see lots of potential in maybe the next couple of years.
Anyone have insight or experience with this? What would the realtors reccomend?
Thanks,
Chuck
When you buy properties solely as "investments", there are always inherent risks. It all depends on your risk aversion level. Are you a "Go big or go home!" kind of person and can afford to lose your shirt on these properties, but could possibly make a ton of dough? Or are you someone who has to totally diversify your mutual funds because you're afraid of them going down in value?
What area(s) are you talking about? Are you talking about single-family homes?
I am a real estate buyer/owner/investor/etc. and I don't view the origin or source of the sale as a downside. Unless of course we are talking about liens, not clear title, or similar issues. I've bought multi-units that were banked owned and a byproduct of fraud. I am not sure what the other layers of complexity or conern would be. I can see the tax aspects, but it is what it is. I wouldn't buy a property under the premise that I could win an appeal. If the current level were reasonable, I might consider it a pleasant surprise or bonus. On the other hand, I appeal almost every real estate tax or assessment, pretty much automatically.
In the so called up and coming areas, I've seen many, bought a few, but I am not sure it's that much different than buying a different origin property in the same area. It might be, but it might not.
Other than the possible assessment angle that 2beinDenver noted:
The bank now owns the property and the bank is the one from whom you will be purchasing it. Do make sure you have title insurance (mandatory anyway unless you're paying cash).
The fact that the house was once purchased by a con man is meaningless.
Take a very careful look at the comps, however. Some neighborhoods were heavily infiltrated by fraudsters. You want to be confident that current values are not reflecting past fraud.
Thank you for all of your responses. I have originally posted this in the Atlanta board and did not realize it have been moved here.
The property I am looking at is a single home in an established neighborhood in South Atlanta. I say this property is an investment because I am hoping to buy, live for a couple of years (single, no kids), and sell for a bigger home as I climb up the corporate ladder and/or decide to start a family.
Good point 2bindenver. I will definitely have the house thoroughly inspected before I buy.
What I was concerned with is the resale value. Eric Young's response was great in that it has reassured me that I will not be dealing with shady characters on my part. My concern is that when I sell 5 years down the line, what kind of impacts will the previous fraud/overvalue/foreclosure have on the property vs comps without that history in the same neighborhood.
well since it is the ATL area PM me the address and I will check out the comps for the area for you also as I posted in another thread make sure you get a home warranty it will cover all the little things.
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.
Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
