Best way to find foreclosures/ preforeclosures in Charlotte (looking for primary residence)

[Coley Mitchell]

Hello - I want to find a good source to locate for foreclosures (preferably pre-foreclosures) in Charlotte, NC. Considering making a purchase with FHA loan as primary residence for 2 years or so if I can find a good enough deal.

Is driving neighborhoods, locating empty houses, writing letters, etc. the best way or is there some sort of service that specializes in pre-foreclosure listings? Also, at what point should I get a realtor involved?

Any input would be appreciated - thanks!

[Jon Holdman]

Banks price their REOs based on market values. They may be higher than you want to pay initially, but I've never seen them price them based on what they were owed. In many cases those would be ridiculously high prices vs. the market. But I do see them pricing them at 100% of the current market values, less any repairs (which are almost always needed.)

About once a month they will drop the price. An agent can help with watching for the drops. When it hits a good price, a bunch of offers will appear and it will sell quickly. So, you want to know when the drops occur. If a property has been on the market for a while, say six months or more, a lowball offer might get accepted. Otherwise, its unlikely. You have to catch those price drops then get your offer in quickly.

You're barking up the wrong tree trying to buy a REO with a FHA loan. REOs are hard to buy, period. You'll need to make 10-20 offers to get one bought. Trouble is most, nearly all, REOs won't meet FHAs inspection requirements. So, you will need to, literally, look at hundreds of REOs, making offers on only the very best ones to get an accepted offer on a property that might qualify.

FHA loans are absolutely the worst from the seller's perspective. There are lots of buyers out there that are making all cash, no contingency, quick close offers on REOs. Banks and even ordinary sellers are highly inclined to take those offers. An FHA offer is especially weak on a REO because the seller knowns they will have inspection issues and banks are often unwilling to make any repairs at all. When I was buying, using hard money, I would consider 100, look at 50, make 20 offers and buy one.

Pre foreclosure means a property that has had foreclosure paperwork filed, but hasn't yet gone to the auction. Some of these get listed on the MLS, often as short sales. Those have many of the same difficulties as REOs. In addition, you're dealing with a lender, sometimes two, who have to approve the short.

You might have luck doing direct mail or door knocking pre foreclosures. Get a GOOD list somewhere. The best source is the county recorder, who receives the initial foreclosure filing. Sometimes that data is readily available. Often, its in some obtuse and hard to use system. But go to the courthouse and ask for help in finding this info. In some areas, there is a company or two that collects this data and distributes it for a price. If you can track them down (try going to REIA meetings in your area), that can be the best source. I've found foreclosure.com to be useless. The data is out of date, so you spin your wheels on deals that are already gone.

But really, primary residence + FHA = buy a pretty house off the MLS.