Expert: Dottie Worthington - 2/26/2004

Question
Hi Dottie,

I have been looking for a home for a few months now but it definitely seems like a sellers market in the lower end price range and so I have been considering getting my house from a foreclosure auction.  

I plan to wait for a house in the area I like to go up at the county auction and let the bank buy it back.  Then immediately speak with the bank rep to try to strike a deal on the property, offering $5000-$10000 more than the bank's bid price.  

This way I avoid the 2 year period in which the previous owner can buy back the house and I'm ensured of clean title since the bank would have wiped away all other liens.  Also, since I (hopefully) strike a deal with the bank immediately after the bank buys the house I can ask for a few days to inspect the house and get my cash arranged rather than needing to pay all upfront and then inspecting after the fact.

It works out for the bank too cause they don't need to go through the long drawn out process of getting the house resold and they get their money back plus a nice profit immediately.  Also, it's no risk for the bank because if I don't close in those few days I ask for they get my earnest money and still go through the same procedure they would've gone through had I not struck my deal with them.

Can you please let me know of any factors I have not considered.  Please also let me know if there are any Pros and Cons that I have not thought of in what I'm planning to do.  Please also let me know if you have other better ideas that may help me get a great deal in this current sellers housing market.

Much appreciated,
Matthew

Answer
You will be in the same market with the foreclosure as with any other home. Only you won't know what is wrong with the home. You would be better off to buy a home that you would know the background on. If you are buying a home that is priced what it is worth in today's market, why do you need to beat that?