buying a foreclosure to flip

[Anna Stephens]

I am just getting started with real estate investing, and have found a home on Zillow being sold by the bank for $71,000.  It was foreclosed to the lender for $95,200.  I'm not really sure what that means as far as the price.  Can I offer a lower amount than the $71,000?  Is there a chance that I could pay less?  The house is just less that 1800 sq ft and needs all new floors, both bathrooms and kitchen update.  The roof needs replaced, it needs gutters, the chimney exterior is missing siding or whatever was on it.  The house once updated should sell for $170,000 or more according to comps in the neighborhood.   I really see potential in this and want it, but I am afraid that I am missing something I should know. Like liens on the property?  How and when do I start to find that out? Any help would be appreciated!

    Thanks, Anna

[Ronald Bourgeois]

@Anna Stephens:

I am just getting started with real estate investing, and have found a home on Zillow being sold by the bank for $71,000.  

-- Contact the LISTING BROKER to submit offers. The listing Broker or Sales Agent will be on the For Sale Sign on the property.

It was foreclosed to the lender for $95,200.  I'm not really sure what that means as far as the price.  

  -- The lenders generally buy back the property and then list it with a Real Estate Agent. 

Can I offer a lower amount than the $71,000?  Is there a chance that I could pay less? 

  --  Drive by the house and find out who the LISTING AGENT IS [ NOT THE AGENTS YOU SEE ON ZILLOW.]  TO PUT IN AN OFFER SEEK OUT THE LISTING AGENT FOR THE BANK owned property

 The house is just less that 1800 sq ft and needs all new floors, both bathrooms and kitchen update.  The roof needs replaced, it needs gutters, the chimney exterior is missing siding or whatever was on it.  The house once updated should sell for $170,000 or more according to comps in the neighborhood.   I really see potential in this and want it, but I am afraid that I am missing something I should know. Like liens on the property?  How and when do I start to find that out? Any help would be appreciated!

  -- THIS IS THE RUB WITHOUT EXPERIENCE IN THIS AREA YOU'LL NEED HELP.  THE TOWN WILL Generally TELL YOU IF THERE ARE ANY MUNICIPAL LIENS.  IF YOU HAVE A LAWYER THEY CAN DO A TITLE SEARCH TO SEE IF THERE ARE ANY LIENS ON THE PROPERTY AND THAT THE TITLE IS CLEAR. ( IN SOME STATES, YOU NEED A TITLE COMPANY TO DO THE SEARCH) You will also have to know if the taxes are up to date, the water bill, and trash bill.  Outstanding permits.  And most important ...   Title V inspection if the property has a septic system, find out when was the last time it was pumped out.  If it was over 2 years this is considered a 'Failed Systerm' and would require a Septic Inspection. If the bank will not pay for a Septic Inspection, then the property will in all practicality be a cash sale as it will not qualify for any loan.  There are some construction loans available that may consider the Septic Issue, check with these Loan Officers for the specifics.  When it comes to septic systems you really have to know the town regulations as well, they may require a completely new Septic System and on the high end consider $20,000 - $30,000   

  --  I Think you need a mentor or a litter more research before you lunge into foreclosed or distressed property.  It sounds great but the research can be intimidating for a new investor.    Keep reading online and best of luck.

-ron