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View Full Version : Anyone had experience buying lender owned houses? (Not short sales.)



Brian Elfert
06-23-2014, 2:22 PM
I am looking at possibly buying a Freddie Mac owned house. Has anyone here bought a lender owned house and what advice can you offer? I know someone here has spent years trying to buying short sale houses, but I am not looking at short sales mostly because of the amount of time it takes to get a reply from the bank.

Freddie Mac claims they usually respond to an offer in 48 hours, but I'll believe that when I see it. I would think response should be a little faster these days because the number of lender owned houses is way down.

Mike Chance in Iowa
06-23-2014, 4:59 PM
We may submit an offer on one this Wednesday if it's still on the market by then. (We're tied up with other commitments until then to go look inside.) One thing we have noticed around here is there are a few agents who only list these types of homes. The agent listing the house we are looking at covers 3-4 counties. All of her listings are inaccurate and if you ask her any questions about the listings, there are always 2 other buyers submitting offers on the home that afternoon so "you better hurry over here and look at it."

After doing this for several years now, we walk around a home first before wasting our agents time to let us inside. We called our agent to schedule a time for Wednesday to walk inside. He told us they are a hassle to do because the selling agents rarely make an effort on these listings. (The listing we looked at said it's 10 acres, but we verified with the county it's only 6 acres. When I called & questioned her about the acreage, she told me she had just been at the property and talked to the owner and confirmed it's 10 acres, yet we know it's been vacant for several years when we looked at it in 2012! The Well drilling records from '77 also show it's 6 acres.)

We submitted an offer on a 10 acre parcel over a month ago and the sellers kept delaying their answer while they traveled around the world. We did thorough homework on this property as it had several concerns including drilling a well. The sellers finally responded that they would not let us drill a well before closing, so we walked away. It's cheaper to pay $20k for the cost of drilling a dry well, then to be stuck with $$$ mortgage on land with no water and you can never live on.

We have ruled everything else out on the market and nothing new is coming on the market but poorly-kept homes that did not sell years ago. It looks like we will be submitting an offer to haul off other people's trash soon.... :(

Dan Hintz
06-23-2014, 7:05 PM
We submitted an offer on a 10 acre parcel over a month ago and the sellers kept delaying their answer while they traveled around the world. We did thorough homework on this property as it had several concerns including drilling a well. The sellers finally responded that they would not let us drill a well before closing, so we walked away. It's cheaper to pay $20k for the cost of drilling a dry well, then to be stuck with $$$ mortgage on land with no water and you can never live on.

And it's quite possible they know the lot is dry, hence their desire to make you wait, hoping you'll get impatient and just open up your pocketbook.

Mark Bolton
06-23-2014, 7:35 PM
wow.. is land that hot in your area that youd toss 20K on a chance? Zoikes

Mike Chance in Iowa
06-23-2014, 8:18 PM
When we built in '95, we had to drill for water prior to closing on the land. It's scary, but when you think about it, would you rather be out the money for drilling or be stuck owning land that you can't build on? The problem is that all the land in our area that is in a reasonable price range either has wetlands or some undesirable issue (such as next to a garbage dump or noisy location) or outrageous CC&Rs such as "no pet chickens on the 20-acre parcels." The "good" land is out of our budget when factoring in livestock fencing and building a shop & barn too. We weren't thrilled with the 10-acre parcel, but it was the best of the worst, and we could have made it work and lived there into retirement.

We not sure if the seller's know anything at all about the property. From what we have dug up, it's been in the family for some 40+ years and it's been untouched all this time. They live in CA, yet travel all over the world full time. Out of all the issues we dug up on the property and all the challenges involved to build on it, the only thing they need to disclose to any future buyer is that there are wetlands. The rest of it will be up to the buyer to do their due diligence or else they will quickly find they didn't budget nearly enough.

Brian Elfert
06-23-2014, 9:14 PM
It sounds like not all of the properties Mike has looked at are lender owned.

I went and looked at a lender owned property today. I think it is way overpriced. I would very much consider an offer at the right price. The kitchen has a small bay bump-out. The bump-out has been leaking water for long enough that the sub floor in the kitchen is half rotted out. The bump-out might need complete replacement. One of the bump-out windows is broken and probably let the water in. Only one of the three bathrooms is even usable. It has electric heat so it would need a new heating and cooling system. A number of the windows need replacement. I estimate $50,000 minimum to be liveable.

Brian Tymchak
06-24-2014, 8:00 AM
We bought our house from a bank in California back in 2004. It had been repossessed, and then resold between banks once or twice before we bought it. I have no experience with Freddie Mac, but that negotiation we went through was very frustrating. We had 24 hrs to respond, they took a week, even though all the paperwork said they had 24 hrs. Maybe Freddie Mac being in the housing business will get you 48 hrs response.

Mike Chance in Iowa
06-24-2014, 1:08 PM
It sounds like not all of the properties Mike has looked at are lender owned.

No. After 4+ years of house hunting nightmares, we are looking at everything. The one we looked at on Sunday afternoon is lender-owned. If it's still available tomorrow when we can look inside with our agent, if nothing is drastically wrong with it, we will submit an offer on it. Our main search criteria has been acreage, 1-story, space for shop, barn & RV storage. This one has treed acreage (no pastures) and a very funky 1978 2-story home but it's cheap enough for us to build a shop - after we get the animals settled in.

Rich Engelhardt
06-24-2014, 1:52 PM
Freddie Mac claims they usually respond to an offer in 48 hours, but I'll believe that when I see it. I would think response should be a little faster these days because the number of lender owned houses is way down.
You can go to Homesteps.com and see how Freddie Mac handles the offer process.

Fannie Mae, @ Homepath.com does things different.

Banks all have their own individual set systems they follow.
None make any sense.

We place an offer on a bank owned house once for $120,000.00. The selling agent contacted our agent the day the bids were opened and asked if that was our highest and final offer. We said "Yes".
The property was listed @ $117,000.00 - but _ we felt it was worth closer to $140,000.00 after al the repairs needed were done.

We never heard anything after that.
A month later, I went online to the county auditor's site and saw that the property had sold for $110,000.00 - Fully $10,000.00 less than our offer!
I searched the buyer's name and saw that it was a holding company or something that owned hundreds of parcels of property.
The only thing I can figure why the bank took their offer was that it was part of a multi parcel buy.

What's interesting is - that was back in 2005 - and - to date, the house is still vacant! It's not for sale, but, no one ever moved in!
Talk about weird!


The sheer number of lender owned houses is staggering. I'm not sure why you say it's down.
I was appalled at the number of pages the newspaper has dedicated to listing the Sherriff's sales!
It's one of the larger sections of the paper each month.
Even though I'm not in the market right now, I've been looking at quite a few places.
There's a bunch of good deals right now for someone willing to do the research.

Rick Potter
06-24-2014, 2:32 PM
I have mentioned this before, but my neighbor has/works for a company that buys lender owned houses, then fixes and flips them, or rents them until they go up in value. He told me they buy a dozen at a time for cash, and they get a special price for buying in lots. The lender wants them off the books, and will take less to sell them for cash, more so if they can sell them in groups.

This is probably one reason why, according to NBC news recently, a reported 44% of homes are sold for cash these days.

This being said, I find it strange that lenders are advertising ARM's again.

Rick Potter

David Weaver
06-24-2014, 3:09 PM
I thought that comment (44% bought in cash) was odd, too, and it suggests that people are either speculating on homes or buying cheap houses to put into rental....that would be speculating, though.

jared herbert
06-24-2014, 10:37 PM
I bought a house that a bank had repossessed three years ago. My son needed a place to live after landing his first job out of college. The bank had over 50k in the house and it was listed for 40k. It was a small 1 bedroom home and it had been completely remodeled and updated but the owner got in over his head and the bank got it back. We looked at with an agent, had lunch and talked about it, then made an offer of 30500 cash with possession before the closing as my son needed to move in immediately. We left to drive home an hour away, the agent called us two hours after making the offer saying the bank accepted. We kept it 2 years and then resold it for 5k more than we paid for it and my son paid us a fair rent while he lived there so every body came out well on that one. I think the fact that it was in a small town and the bank was locally owned and not part of a chain had a lot to do with how fast it all worked.

Brian Elfert
06-24-2014, 11:30 PM
The sheer number of lender owned houses is staggering. I'm not sure why you say it's down.


The number of lender owned houses listed for sale is way down locally. The median price for houses in our area is quickly rising and it is blamed on less lender owned houses on the market. There is a news story at least once a week talking about the number of lender owned houses on the market being down and I have no reason not to believe them. It may be that there are a lot of lender owned houses that are not on the market. The economy locally is doing better than the nation as a whole.

My agent did some research and figures the house I looked at is worth $40,000 to $50,000 less than the $190,000 asking price. I very much doubt I'll end up owning that house since my agent says it is unlikely they would take an offer that low. I estimate a minimum of $50,000 in repairs to make the house liveable. The house has a 3 acre lot which does up the value somewhat. I really have no need for a 3 acre lot because it means a lot of mowing.

Rich Engelhardt
06-25-2014, 6:48 AM
Interesting..
We're swimming in a sea of lender owned houses down here in NE Ohio.
We own one house in Lorain. Ohio that's lost over half it's value since 2005 & the projected value says it won't be until 2030 that the value recovers to the 2005 level - if then!

Jim Matthews
06-25-2014, 7:35 AM
This is not a new phenomenon. Cash purchases, particularly waterfront or "safe haven" neighborhoods like London or New York draw international buyers.
(Remember the $88 Million dollar Russian "dorm room" (http://nypost.com/2012/03/14/russian-billionaires-estranged-wife-says-88m-dorm-room-was-bought-to-hide-assets/)?)

From Marketwatch of the WSJ:

"Walt Molony, a spokesman for the National Association of Realtors (http://www.marketwatch.com/companies/National_Association_of_Realtors?lc=int_mb_1001), says that the associationís estimate of the share of the market made up by all-cash buyers is lower than othersí, at 31% in July, but that itís still at an all-time high. Molony says that investors make up 32% of all-cash buyers (70% of all investors pay cash), up from 31% in October and 30% in November 2012, while retirees whoíve built up equity in their homes or paid off their mortgages account for around 12%. The rest include vacation-home buyers and foreign buyers."

Take institutional investors out of the picture, and it's just as it always was: retirees cash out their current digs and roll the equity into a smaller place - all at once.

Mike Chance in Iowa
06-26-2014, 1:34 PM
We passed on the lender-owned house last night. Once we got inside, it was obvious it was an owner-builder and wanna-be architect with no clue as to either skill. The floors were uneven, large gaps in the tongue & groove, large gaps where the sheetrock met the ceilings, floors, outlets, and that's just the good stuff. When we agreed that this was not the house for us, our agent responded with "Thank you." That was the best of the worst, so all we can do is wait for new stuff to come on the market. We haven't seen anything new over 2 acres come on the market in weeks. The last "new" one that came on the market was one that didn't sell 3 years ago.