If you\u2019ve thought about buying a foreclosure, plenty of websites offer advice \u2014 or even promise to teach you the tricks of buying foreclosures<\/a> and flipping homes for a \u201clow fee\u201d of several thousand dollars. But what\u2019s missing are the stories of real-life homebuyers who\u2019ve actually bought a foreclosure.<\/p>\n What\u2019s it really <\/i>like to negotiate with a bank? What happens if the copper plumbing is stolen out of the house between the offer and close? If you\u2019ve ever wished you could sit down with someone who\u2019s been through the process and is willing to share their experience, here are five homebuyers<\/a> on what it\u2019s really like buying a foreclosure.<\/p>\n Homebuyers Oron and Lauren saw a great opportunity in the foreclosure they bought. They hadn\u2019t been specifically looking for foreclosures when they found the bank-owned property<\/a> back in 2015, but it was an amazing deal.<\/p>\n \u201cIt was on a dead-end cul-de-sac with three other houses,\u201d Lauren explains, \u201cwith almost an acre of land, two outbuildings, and priced at only $75,000.\u201d They made an offer of $70,000, which the bank accepted.<\/p>\n Their Realtor, Annette Wilcox<\/a>, helped them make the offer for less than the asking price<\/a>. \u201cWe weren\u2019t sure what to expect, but they accepted it,\u201d Lauren says, \u201cand we didn\u2019t have any trouble getting a mortgage.\u201d<\/p>\n Luckily, Oron is handy, because the home had sat vacant for 18 months and needed a little work.<\/p>\n They did most of the cosmetic updates<\/a> before moving in, replacing the HVAC and water lines.<\/p>\n Lauren\u2019s advice to other foreclosure buyers is that they should \u201cAlways know that there\u2019s going to be more money involved than you think for repairs \u2014 add 20% to what you think your budget is going to be.\u201d<\/p>\n They also updated the home to match neighborhood comps \u2014 such as adding butcher-block countertops and upgrading the flooring.<\/p>\n They sold the Norwalk, Ohio, home three years after purchase for $160,000 \u2014 even though they\u2019d intended to stay long-term, a job opportunity in Costa Rica proved too much to resist. When they sold, they realized a healthy profit of $90,000.<\/p>\n So needless to say, they\u2019re happy they bought a foreclosure, and they would do it again!<\/p>\n Barry Karch<\/a> works with 70% more homes than the average El Paso<\/a> agent, which positioned him well to flip a house. He knew the market and what the home could capture in terms of sales price once it had been fixed up. Even though he\u2019s normally a buy-and-hold investor (also known as a landlord), he couldn\u2019t pass up the potential deal.<\/p>\n His flip was, \u201cSuper dirty and had all kinds of junk in there, so it didn\u2019t look very attractive,\u201d he says, \u201cbut it was fine once it was cleaned out.\u201d<\/p>\n It didn\u2019t need any repairs, and he never even made a payment on the mortgage<\/a> he took out to finance the purchase. Closing on the sale didn\u2019t take long \u2014 as the bank already owned the property \u2014 and with a quick turnaround, he\u2019s satisfied with the roughly $15,000 he made.<\/p>\n It\u2019s not uncommon to have to sell the house and split the proceeds in a divorce, or to see one partner buy out another, but sometimes keeping the kids in the same neighborhood and schools can be tough. When Kristin S. got a divorce back in 2015, the only homes she could afford in the areas she wanted were foreclosures. Buying one got her a lot more house for her money.<\/p>\n \u201cI purposefully used the listing agent working for the bank to also represent us,\u201d she says, \u201csince I knew that, by law, they had to represent us both fairly.\u201d (This is not permitted in every state.)<\/p>\n Because her divorce wasn\u2019t final, she had to work out a deal with the bank. Her mother and stepfather bought the home with the agreement that the bank would let Kristin take over the mortgage as soon as the divorce finalized. The unique circumstances meant that she did have to put down 20%<\/a> on a purchase price of $245,000. Homes in the neighborhood now sell for upward of $300,000.<\/p>\n The house needed a lot of work, but the biggest issue was mold<\/a> all over the garage walls and sheetrock. Contractors came to the house while the agent was there and gave bids on the spot.<\/p>\n \u201cIt\u2019s a tuck-under garage and bedrooms above,\u201d she describes, \u201cso the listing agent agreed to pay for half of the repairs for a total of $6,000 because my son has asthma and his bedroom was above.\u201d<\/p>\n Her best advice for other buyers looking at foreclosures is that it\u2019s not for the faint of heart. \u201cIf you are an anxious personality, buying a \u2018fixer-upper<\/a>\u2019 of any kind may be too much,\u201d she warns. You should know, going into it, how much uncertainty you are willing to stomach.<\/p>\n She\u2019s almost completely remodeled the home since closing, and has enjoyed the process, but not everyone has the vision to see what can be. \u201cKnow thyself\u201d particularly applies when buying in the foreclosure market.<\/p>\n When Marie S. started shopping for foreclosures, she wasn\u2019t looking for herself. She and her husband had decided to start investing in real estate, but they didn\u2019t have a lot of cash<\/a>, so a foreclosure looked like the perfect option. But when their agent showed them a cute house on the east side of St. Paul, she fell in love.<\/p>\n \u201cIt had a built-in buffet and original woodwork, a nice backyard, and a two-car garage,\u201d she says. It was even in a better neighborhood than their current home. But when they made an offer to Fannie Mae<\/a>, another buyer came in higher. They moved on.<\/p>\n Until their phone rang two months later. \u201cI was completely shocked when my agent told me that the other buyer\u2019s financing had fallen through,\u201d she says. They had an opportunity to get the house, but they had to make a decision that day. As well, Fannie Mae was only giving them two days to overnight mail the earnest money deposit.<\/p>\n Their agent took them through the house again, and they decided to jump on the opportunity. It was a scramble to transfer funds from an out-of-state bank, get a cashier\u2019s check, and drop it in the mail, but by Friday night, they\u2019d won the house.<\/p>\n When they arrived for the inspection<\/a>, the home inspector told them that the house was in great shape cosmetically, but it needed a new roof<\/a>. He asked if they wanted to go ahead with the purchase or walk away; since the house was already such a great deal a new roof was doable. But when he went into the basement, another problem emerged.<\/p>\n Sometime in the two months between when they\u2019d originally walked through the house and when they\u2019d had their offer accepted, someone had broken in and stolen all the copper plumbing. When buying a Fannie Mae house, there\u2019s no way to negotiate for any repairs after a home inspection; it\u2019s either buy the house or walk away.<\/p>\n \u201cIt was really frustrating dealing with them,\u201d Marie explains.<\/p>\n \u201cWe tried talking to them and explaining that the house was now missing the copper, and that we\u2019d made an offer on a house with the copper intact, so in our view they were responsible to fix it, but they wouldn\u2019t budge.\u201d<\/p><\/blockquote>\n They wouldn\u2019t drop the price, and they wouldn\u2019t replace the stolen pipes.<\/p>\n Even so, at $60,000, they went forward with the purchase and rented their existing home<\/a>. And then the first water bill came.<\/p>\n \u201cIn addition to stealing the copper, the thief had stolen the water meter. But the city had replaced it before the home inspection, so we didn\u2019t know about it,\u201d Marie sighs. \u201cFannie Mae hadn\u2019t paid the bill, so now the city was billing us!\u201d She remembers the bill being around $500.<\/p>\n Once again, Fannie Mae didn\u2019t want to pay. But this time, Marie and her husband had some leverage.<\/p>\n \u201cBecause they\u2019d received the bill two months before closing, and the city proved they\u2019d billed them, our agent was able to force them to pay it. But it was a nerve-racking week waiting to hear back.\u201d<\/p>\n Finally, all was set in their new home. When she sold it five years later, she realized an almost $100,000 profit, even after repairs. Her advice for foreclosure buyers?<\/p>\n \u201cBe patient; things will go wrong, and it\u2019s not easy to deal with Fannie Mae or a bank as owner. It won\u2019t be like negotiating<\/a> or working with an owner as a seller.\u201d<\/p>\n While agent Annette Wilcox<\/a> had hoped to find a foreclosure, it was a seller\u2019s market in her area.<\/p>\n \u201cIt was more about looking at neighborhoods and the size of the house,\u201d she explains, \u201cbut we\u2019d hoped to find a house we knew we could do some fixing up and having instant equity.\u201d As an experienced agent who works with 77% more single-family homes in Norwalk, Ohio<\/a> than other agents, she knew the power of built-in equity.<\/p>\n When she found the perfect house, she bought it \u2014 twice. \u201cWe were the winning bid at auction<\/a>,\u201d she says, \u201cbut when I presented the offer<\/a>, I realized I had been bidding against the bank!\u201d She withdrew, irritated, and decided to wait. Sure enough, it came back on the market a few months later, and she began negotiating with the agent.<\/p>\n![\"A](\"https:\/\/www.homelight.com\/blog\/wp-content\/uploads\/2020\/09\/buying-a-foreclosure-cul-de-sac-666x381.png\")
<\/a>A great opportunity<\/h2>\n
A quick flip<\/h2>\n
Moving on after divorce<\/h2>\n
![\"\"](\"https:\/\/www.homelight.com\/blog\/wp-content\/uploads\/2020\/09\/buying-a-foreclosure-pipes-666x381.png\")
<\/a>An unexpected buy<\/h2>\n
![\"\"](\"https:\/\/www.homelight.com\/blog\/wp-content\/uploads\/2020\/09\/aubrey-odom-ITzfgP77DTg-unsplash-scaled.jpg\")
Buying a family home<\/h2>\n