Yesterday everyone’s favourite guru, Warren Buffett, said if he were a “handy type” he would go out and buy some distressed homes.
Before all you handy types run out and buy a foreclosed home, we think you should read this account from a professional foreclosure scout. He says 95 per cent of newcomers at foreclosure auctions are gone after 1 or 2 houses because they are broke or made simple mistakes.
The anonymous foreclosure scout explains how people get played at foreclosure auctions (via Reddit):
Go to auctions and hang out, half the game is actually buying the house and competing for the high bid. The atmosphere is a lot like that show “Storage Wars”, but you are dealing with WAY more money, though the biding techniques and rivalries are similar. For example, if big players are avoiding a property that appears like a win, there is obviously something you have overlooked… IRS Lean? Inside is trashed? Something screwy with the banks or the loan?
Knowing the actual status of the title is VERY important, nothing is worse than seeing somebody buy a 2nd loan on a house. Essentially, he bought a loan, but not a house. Another example is a random guy who showed up, paid cash for a house that we knew had major sewage problems. If he planned to sell the house he would need to do 40K in sewage lines under a major highway, the guy basically [expletive] himself but walked off smiling from ear to ear.
I guess what I’m saying is, if you want to buy a house at auction then take some serious time doing homework and learning the ropes. 95% of newcomers are gone after 1 or 2 houses because they are broke or made simple mistakes. I’d just try and find a short sale from the bank.”
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