Buying a default-mortgage house

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Buying a default-mortgage house

Postby Icon » 27 Jan 2011, 14:47

I often see ads for this. It says that XYZ Bank is selling this nice home at a discount rate. Dunno if anybody has experience with this. Back home, this is not a good option, as the mafias like those auctions, and hog the floor. Dunno what happens here. Do you have an open auction with other sellers? Can I ask to auction on this specific home or not?

Regarding the house itself: are they auctioning it off for the real price (bank estimate) or just for the part owed (meaning teh house might be worth 10 million buy the bank's asking price is 5 million only)? I'd feel awful if the family that lives there would not only lose their home but still be struck with a dept. That said, can teh bank sell it for a profit, meaning they set a high or at least market price? Or will they set one and then just allow as far as the auction goes?
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Re: Buying a default-mortgage house

Postby Mick » 27 Jan 2011, 15:23

I put a bid in on a property that was in my own block a while back. Its quite a while ago so the specifics might be hazy, and although you don't need to we used a real estate agency to help put in the bid. There are certain legalities that if you haven't made yourself familiar with the laws could create problems. You will need a bankers check which is as good as cash to present to show you have the funds, but I forget exactly how much of the bid price that was exactly. The auctions are done by the local court, and they have details of all the auctions coming up, I believe most real estate firms have this information, so as a suggestion you might want to talk with one to get more insight.

The property we put a bid in on, there were several bids higher and it ended up going for about the market price. As you noted a lot of these properties are repossessed by the banks and they are really only interested in getting back their money so its not at all unusual to see a home owner very unhappy at the price paid and that might translate to harassment of the new owner, or have the current owner mess the place up by pouring concrete down the drains or something else.

About minimum price, as I recall there is one, and it gets dropped lower and lower each time the property comes up for auction. Again in the case of the property we were trying to get, I think it was the 3rd time round, and the drop had put the minimum price well below market value and a lot of people came out and had a try for it.

Also, as it was in the same place I lived, I was able to get a full story from the guy who runs the community why it was being sold, what the condition of the place was, basically the full story, which in this case wasn't anything particularly fishy going on, no one died inside or anything, nor were their likely to be anyone retaliating for buying their property too cheaply and so on. Again as I recall, you wont be allowed to view the property as it might have all the owners belongings inside, which is another legal issue that in our case the real estate guys would have taken care of.
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Re: Buying a default-mortgage house

Postby Belgian Pie » 27 Jan 2011, 15:46

My wife's friends are into this kind of house buying, according to my SO they go for a reasonable price, but it needs to be paid cash, so you need to have the money at hand, getting a mortgage in the short run is almost impossible ... and you need to have some guanxi because it's highly competitive business ... my wife is going to learn the trade the moment she retires from her present company she told me ...

I just know what my wife told me ...
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Re: Buying a default-mortgage house

Postby Gilgamesh » 28 Jan 2011, 07:57

This is how we bought our apartment. We (actually my wife) did everything. She showed up at the courthouse and put in a sealed bid on the apartment we wanted to buy. Whoever has the highest bid wins. The court officer opened each bid and stated the amount that was offered. We then had seven days (I think) to come up with the whole amount or lose the house. This was all a long time ago so the details are a bit fuzzy.
Since it was a foreclosure, you couldn't actually see the inside of the house but could see the plans. We knew the basic layout of the place because a friend was living in the same apartment building but didn't get to see the actual place we bought. The place worked out okay, there are some things that I don't like about it but have learned to live with it. The biggest thing I liked about the place was that I could pay it off in a year. (It was a pretty cheap apartment)
After we bought it and before we could take possession, we had to apply for a court appointed inventory taker to come into the house and check out the contents. Apparently, old owners can come back and claim that they left money or jewels in the house and want them back. They can then take you to court to recover their "lost possessions". The court said the wait time for the inventory taker would be about nine to twelve months. Luckily, a few days after we bought the apartment, we happened to be in the neighbourhood of our apartment (my wife's parents are close by) and we saw the door open. It was the old owner. We talked to her and she agreed to sign a letter saying she relinquishes all rights to the contents of the house and gives it to us. We took this to the court and they gave us the keys.
One way around all of this, is to have a real estate agent help you but it does increase the cost. I remember a real estate agent telling us that they take care of all that stuff and you can move in as soon as you buy it. We didn't know any of this stuff when we bought the house. Thankfully, it all worked out for us and we saved around NT500,000 by not using a real estate agent. I think it was around this much anyway. Like I said, it was a long time ago.
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Re: Buying a default-mortgage house

Postby Icon » 28 Jan 2011, 10:30

Thank you for your input, guys. So, it seems that the owners are not that "helpless" facing "big bank". :lol: Just kidding.

Does anyone know how long the original owners have to vacate the premises one sale is concluded? It seems from your info, especially Gilgamesh's, that they remain there well after sale is complete. I'd be more worried about getting all their stuff out than keeping anything from them or being accused of "stealing" anything that belonged to them. Is it up to them or to the buyer or to the bank/court to set the time line to vacate the premises? Is it negotiable or is it a fixed time frame?
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Re: Buying a default-mortgage house

Postby Gilgamesh » 28 Jan 2011, 12:16

With our house, the owner was long gone. I'm not sure about situations where the owner is still living there. To be honest, I don't think I would have bought the place if someone was still living here. I do know of one place where the owners had defaulted but were still living there. They were allowed to live there until someone bought the place and then had to vacate. I don't know about any timelines around this though.
Even though the owners had disappeared from our house, they still left a lot of stuff here and it was a real mess inside. A lot of the stuff we just threw away, but we kept some of it. It seemed weird that we still had to get a court appointed inventory done on the house even after the owners disappeared and no one knew where they were but my wife insisted that we had to do it. Plus, the court never gave us the keys until we produced that letter signed by the previous owners relinquishing all rights to the property and contents. We were very lucky to run into the previous owners and that they were willing to sign the letter.
If I recall correctly, if you go through a real estate agent, they are supposed to take care of all this and get you into the house fairly quickly.
The biggest risk was that we couldn't see the house before we bought it and we were told a number of stories about people pouring cement mix down the toilets, busting up walls, etc. before they left. I figured that the house was so cheap that even if we needed to do some work it would still be worth it. Fortunately, nothing was done to the house except it being a mess.
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Re: Buying a default-mortgage house

Postby Gilgamesh » 29 Jan 2011, 07:14

I probably confused you about the owner living there because of the letter the owner signed. The owner had actually abandoned the house about a year before we bought it. No one knew where he was or how to contact him. After we bought the place and found out about the inventory that needed to be done, we happened to notice that the door was open to the apartment. We quickly went to see who was there and it was the owner's girlfriend. She was there to pick up a few things. We talked to her and she agreed to take a letter to the owner to see if he would sign it. He agreed to sign it and mailed it back to us so we never had an real contact with the owner other than through the girlfriend who we only say once completely through chance.
Sorry for the confusion. I was trying to make my house buying story a bit shorter and just ended up confusing things.
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Re: Buying a default-mortgage house

Postby ironfist » 14 Dec 2011, 22:38

hi guys any tips on how to sell the house? I got an agent to sell my house but I am new at this...anything I should watch out for? get a lawyer? thanks guys can't find any info on selling a house
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Re: Buying a default-mortgage house

Postby Taiwan for Life » 15 Dec 2011, 21:22

You just have to be a little careful that the agent might put pressure on you to lower your price to force through a sale, which will result in them getting a commission.
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Re: Buying a default-mortgage house

Postby ironfist » 16 Dec 2011, 16:58

ya I ain't worry about that, what I am worry about is maybe agent will team up with the paper guy and con me. Like house is transfered to buyers name but I still havn't get the money etc.....
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