DEAR BOB: I aminterested in your suggestion not to bid at foreclosure sale auctions but toinstead contact the foreclosing lender immediately after an unsuccessfulauction. What are the advantages of this strategy, rather than bidding at thepublic foreclosure sale? –Adrienne P.
DEAR ADRIENNE: Youare obviously very intelligent. If you bid at the lender’s foreclosure saleauction, you must produce cash, either at the auction or soon thereafter.
Purchase Bob Bruss reports online.
Also, there isoften competition from professional bidders, known as “the 40thieves.”
If there were nobidders at the auction, the lender then obtained title to the foreclosedproperty. It is then known as REO (real estate owned).
Most lenders areanxious to get rid of REO property as fast as possible because holding it coststhe lender money every day. If you contact the foreclosing lender fast (the dayafter the auction is best) before the property is listed for sale with a localreal estate agent, be sure to emphasize in your offer the lender will save theagent’s typical 6 percent sales commission.
Also, some lendersoffer incentive mortgage financing on their REO property, making it easy foryou to buy with minimal cash. More details are in my special report,”Foreclosure and Distress Property Secrets,” available for $5 fromRobert Bruss, 251 Park Road, Burlingame, CA 94010 or by credit card at1-800-736-1736 or instant delivery at www.BobBruss.com.
WHY BANK WON’TAPPROVE A MORTGAGE ON UNCOMPLETED HOUSE
DEAR BOB: My housewas damaged in a storm. I recently put on a new roof and painted the exterior.However I can’t find any bank that will make me a mortgage because the drywallis not completed on the interior. Now I need a mortgage to pay the finalconstruction costs so I can sell the house. Any ideas? –Mario M.
DEAR MARIO: Mostinstitutional lenders won’t approve a home mortgage on a house that isundergoing renovation, primarily due to mechanics’ liens. However, the bankwhere you do business might make a construction loan. If not, perhaps a homeequity loan.
Or an individuallender will probably make a “hard money” loan for a year or two. Butthe interest rate won’t be cheap.
An experiencedmortgage broker can usually find a local lender for just about any uniquesituation such as yours.
CAN HOMEOWNERKNOCK DOWN HOUSE AND BUILD NEW?
DEAR BOB: How dohomeowners obtain financing to knock down their house and rebuild it again? Itseems like all my neighbors are doing this. My one-family house is pretty old(1925) and needs lots of work. I am thinking of knocking it down and building atwo-family house. Where would I start if I go this route? –Lida R.
DEAR LIDA:Presuming the zoning for your lot allows construction of a two-family house, agood place to obtain a construction loan is a nearby bank branch or communitybank that specializes in construction loans.
Ask if the bankoffers construction loans that convert into a permanent mortgage afterconstruction is completed. A competent community banker can probably refer youto an architect and general contractor to build your two-family house.
The new RobertBruss special report, “The 20 Essential Questions Smart Home Buyers Ask toAvoid Overpaying in a Buyer’s Market,” is now available for $5 from RobertBruss, 251 Park Road, Burlingame, CA 94010 or by credit card at 1-800-736-1736or instant delivery at www.BobBruss.com.Questions for this column are welcome at either address.
(For more information on Bob Bruss publications, visit his
Real Estate Center).
Copyright 2006Inman News