Buying a foreclosed house

[Anthony Caleca]

hello i have a question about buying a foreclosed home. So my finances sisters house is getting foreclosed and they don't care to much (weird I know) but it's on a nice piece of property on a quiet residential block and beautiful neighborhood. If I wanted to buy the house how can I go about getting it? 

Would I call the bank that is forclosing the property and see how much the mortgage is and how much is owed, and see if I can possibly satisfy it and transfer the house to my name. Is that how it works I never did this before.

Now another thing is from what I hear they  owe $275,000 to the mortgage company but the house has an appraised market value of $435,000. Would I be able to pay pay the mortgage company the $275,000 they are owned and pretty much be left with a house that has $160,000 "built in equity" or would I have to buy the house from the bank based off the market value

PLEASE HELP because I love the house and if it is possible to buy the house for the $275,000 that is owed to the market instead of the market value of $435,000 that it would make for an awesome investment in my eyes.

[Jon Holdman]

Until the sheriff sale (or whatever its called in your area) happens, it still belongs to your future sister in law.  They are the ONLY ones who can sell it to you.  The lender won't even talk to you unless you have an "authorization to release information" signed by the borrower (and sometimes notarized.)  

This story doesn't add up. If its truly worth $435K and the $275K loan is the only encumberance you SIL would be a complete idiot to do anything other than sell at the best price she can get. If they sell at $435K on the MLS, the will net something like $400K after costs. That puts $125K in their pocket after paying off the loan. So, I suspect there's more to the story than you know. Maybe their are other liens, maybe there is damage to the house. Something. You need to find out.

If you really want to start the ball rolling, write a purchase contract with them for $285K.  That gives enough room to pay the closing costs and pay off the loan.  Take it to a title company and have them start the process.  They will do a title search and you can find out more about the situation.  Meanwhile, start a serious evaluation of the work needed and the real value.  A house that's being lived in will always need some amount of work to get it ready to sell.

If its truly worth $435K as-is, and you SIL sells it to you for $285K, then yes, you could turn around and sell it at a higher price. Realize the highest price for a move-in ready house is achieved by listing it with a seller's agent on the MLS. You will have significant closing costs, but you will get a higher price.

If you do this and make a significant profit, you should plan on the story of how you screwed your SIL out of her house to come up at every family event.  Even if she agrees to the deal now.  Any profit you make is truly coming straight out of your SIL's pocket.