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??? about buying a USDA foreclosure

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amthystwlf
New Contributor

??? about buying a USDA foreclosure

There is a small home that fits my needs scheduled for foreclosure auction in mid Feb 2016. The USDA website lists the amount of the govt bid. I have my prequalify into the local office and I am waiting for them to get back to me to let me know if I am approved and if so how much. But now I'm curious if the process would be any cheaper/faster if I were to try to buy this particular property that isn't officially foreclosed? Would USDA still require all the same inspections/appraisals since they already handle the property?

 

Any advice is appreciated.

Scores on 4/182016
Mortgage - EQ 694 EX 713 TU 706
FICO - EQ 654 EX 696 TU 691
Message 1 of 10
9 REPLIES 9
cartwrna
Valued Contributor

Re: ??? about buying a USDA foreclosure

You would still need an appraisal I'm sure, inspections possibly not? I am in the process of buying a Fannie Mae foreclosure. I am under contract and close to close (waiting on title work and appraisal). I wasn't required to do inspections, but I am using a conventional loan. The only reason I passed up inspections is due to it being built in 2010 (actual build wasn't finished until 2012), and the builder being local to my community and well known for their work. I did walk through and inspect every nook and cranny myself. If it's an older home, I would never pass up inspections. The things that could be wrong could cost you dearly.
Don’t take your credit for granted, use it with care! These days, catch me in the bankruptcy forum!?
Message 2 of 10
StartingOver10
Moderator Emerita

Re: ??? about buying a USDA foreclosure


@amthystwlf wrote:

There is a small home that fits my needs scheduled for foreclosure auction in mid Feb 2016. The USDA website lists the amount of the govt bid. I have my prequalify into the local office and I am waiting for them to get back to me to let me know if I am approved and if so how much. But now I'm curious if the process would be any cheaper/faster if I were to try to buy this particular property that isn't officially foreclosed? Would USDA still require all the same inspections/appraisals since they already handle the property?

 

Any advice is appreciated.


^^Some confusion above^^

 

The foreclosure auction is what transfers ownership to the foreclosing entity (whoever owns the loan).  USDA is not the actual lender but they do guarantee the loan to the lender, this is what allows lenders to make high LTV loans to low income participants. 

 

If you try to buy it prior to the foreclosure you would have to work with the current owner - which is the person losing the house. This means you would have to go through a short sale with the current lender.  There isn't enough time left before the foreclosure auction to close it by mid-Feb 2016, even if you had all cash, it would be extremely difficult to impossible to get the lender to sell it prior to the auction date. 

Message 3 of 10
amthystwlf
New Contributor

Re: ??? about buying a USDA foreclosure

My brother lives near it and stopped by yesterday to look at the yard size fo me. You can see in some of the windows and the place was left an absolute mess but that is to be expected with a foreclosure. However, he also let me know that when he was turning around at the top of the hill, he could see a large hole in the roof. So even considering trying to get it is off for me because while I wouldn't mind having to paint or replace carpet - I do not want a place that needs any kind of major repairs.

Scores on 4/182016
Mortgage - EQ 694 EX 713 TU 706
FICO - EQ 654 EX 696 TU 691
Message 4 of 10
cartwrna
Valued Contributor

Re: ??? about buying a USDA foreclosure

Not all foreclosure are that way. I'm currently under contract on a Fannie Mae foreclosure that was built in 2010. It is in immaculate condition. My realtor knows the previous owner and his family very well, he informed me that they guy just got in over his head and knew it was time to let it go. It's in such great condition that after 100% inspecting everything myself I passed up having inspections done. The only issue we found was that the fire alarms had been removed for some odd reason, and basement door had a small crack in it. Don't let foreclosure a scare you away, there are a lot of nice ones to be had.
Don’t take your credit for granted, use it with care! These days, catch me in the bankruptcy forum!?
Message 5 of 10
StartingOver10
Moderator Emerita

Re: ??? about buying a USDA foreclosure

cartwrna is right.  I have sold foreclosures in all kinds of condtions from excellent to very poor.  Fannie Mae will even fix up the property sometimes before they put in on the market.  You have to look at each individual foreclosure to see its actual condition.  I always suggest inspections even if the f/c is in what looks to be good condition because you just don't know if the major systems (HVAC, plumbing, electrical etc) are working without a thorough inspection. I have seen Fannie (and others) go in and complete cosmetic repairs without doing the actual repairs that need to be done for systems or wood rot (seen them paint over woodrot).  Be careful if you skip an inspection - be prepared for surprises. 

Message 6 of 10
Lemmus
Established Contributor

Re: ??? about buying a USDA foreclosure

...I'm closing on a HomePath foreclosure tomorrow that is in very good condition ...but having looked at several foreclosures over the past year, I have to agree with SO10 on the inspections ...the feds are very restrictive as to how their listing agents present and sell the property ...I've seen fannie mae properties advertised that looked perfect in the pics but were disasters in person ...one even had a huge hole in a front wall resulting from a fire that wasn't in the pics or mentioned in the details ...one looked perfect to me on first visit but my realtor noticed where it looked (to her experienced eye) like a roof leak had been painted over ...turned out the roof required complete replacement

 

...the home I'm buying now is in very good condition but I gladly paid for inspection including 4 point and wind mitigation ...total cost was $325 but it turned out the wind mitigation report found that the home had an almost new roof that wasn't reported anywhere and met the current south florida hurricane standards ...that alone saved me more than $1k a year in home insurance premiums

 

...hth


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Message 7 of 10
amthystwlf
New Contributor

Re: ??? about buying a USDA foreclosure

Thanks everyone, I'm not one to discount a home just because its in foreclosure. However, if I (or someone I trust) can see something major like a huge hole in the roof - I'll pass. My grandpa was a contractor so I know enough to know that with a hole in the roof, it is likely to need major work now. Especially given that we recently had a couple weeks of really bad rain. I'm guessing at min the floors would need to be done and I'd be worried about mold after water standing around.  I have not-asthma-but-similar breathing problems so not taking chances with any mold.

 

One advantage I have in my home search - the real estate broker I plan to work with used to be a USDA home inspector. That will be a huge help in looking at properties, even before I get an inspection. He can also advise me on any speciality inspections I might need - like termite inspections. Another good thing is that he also runs an appraisal business with a good record, that's actually how I found out about him. So that should make it easier to decide if a home is worth what the asking price is.

 

I'm an easy to please home buyer. I have just a few must haves and preferences - 2 bed min, single story preferred, not a huge piece of property, house preferred over trailer, would love fenced yard for my cat, place to park a vehicle or 2 for company, no really huge trees close to home - those kinds of things. Beyond that, I'd be happy with just about anything, just to finally have my own place and no more dealing with slum landlords. 

 

 

Scores on 4/182016
Mortgage - EQ 694 EX 713 TU 706
FICO - EQ 654 EX 696 TU 691
Message 8 of 10
ezdriver
Senior Contributor

Re: ??? about buying a USDA foreclosure

"I'm an easy to please home buyer. I have just a few must haves and preferences"

 

I thought those were extinct. lol

 

Message 9 of 10
amthystwlf
New Contributor

Re: ??? about buying a USDA foreclosure

no, but like many on the verge of extiction, we learn to hide among the masses Smiley LOL

 

but seriously, except for the 2 bed thing, nothing else is a deal breaker. they are just wants. but we me & adult son - well - I'm not sleeping on a couch and neither is he - not if we buying a place. don't drive so doesn't matter about vehicle parking cause I know USDA requires a place to park 1 vehicle and it's only rare times I migh have more than 1 vehicle with people visiting. Single story - would love that but as long as a bedroom and essential rooms are on the main floor - I could care less. Heck a finished attic means my son could have his own space for entertaining his friends. I just have a knee that likes to give out randomly so no stairs to climb would be wonderful. I could save up to fence a yard and I know my brother and his teen sons would be willing - all I need to do is provide cold drinks and a nice meal. I like trees but what I like is smaller ones - like dogwoods and crepe myrtyles - trees that won't take out a roof if they come down. If the yard is too big to push mow, I'll just pay nephews to cut it or my son could do it or I'd find a riding mower.

 

I can work around almost anything other than a single bedroom. I'm actually more concerned about the overall cost of a place versus what I would like to have. With a cheaper place, I could repaint/remodel/fence yard.

 

But then again, I think anyone living under a slum landlord would be happy with just about anything. I'm tired of not being able to use my bedroom for roughly 3 months in winter. I'm tired of sleeping in a recliner because my living room is too small for even a couch to sleep on. I'm tired of not being able to run my heat over 62F even on the coldest days because the furnace can't keep up with demand and runs on auxillary heat continually. I'm tired of having a drink sitting in my living room feel like it came out of my fridge. But most of all, I'm tired of being in pain all the time because of how cold it is inside. I have fibromyalgia - and when it gets cold - my fibro flares up and I hurt worse.

Scores on 4/182016
Mortgage - EQ 694 EX 713 TU 706
FICO - EQ 654 EX 696 TU 691
Message 10 of 10
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