Buying A Pre-Foreclosure House

That beautiful home with the cosmetic problems I wrote about previously? I bought it. After seeing it and dismissing it and then thinking about it over a weekend, I took a second look and, ultimately, bought it.

Turns out, it was a pre-foreclosure house. The bank was thisclose to taking the home back. I had my realtor find out what the seller’s floor price was. It was about $10,000 less than the original list price. And it was more in line with what I wanted to spend on a house. I wondered why no one else wanted the house though. Was it really just the cosmetic stuff? I know I dismissed it because of the cosmetics, but is everyone as shallow as me?

I put in an offer for their floor price. They accepted it. The selling agent contacted the bank to put a hold on the foreclosure, etc.. That’s when the frustration set in. 

Because it was pre-foreclosure and the seller was over it and not getting anything out of it, the seller refused to do anything. I extended my option period twice because I had to wait for them to turn the power and water on so I could get it inspected. After the second extension, when they went into breach of contract, I said this is ridiculous. One Monday morning, I called the power company and had the power turned on, the city and had the water turned on, and an inspection scheduled for Wednesday. I emailed my realtor and said, “I just did x, y, and z. The inspector will be sending out a confirmation email shortly. I want anyone who needs to be there for the inspection there on Wednesday at noon.” All of that took 20 minutes.

The inspection went just fine. Nothing major. Great. Let’s move forward. Appraisal went fine. It appraised for more than I’m paying. Fab.

Then, a few days later, the title company sent me a bunch of documents and among them was a document showing a $17,000 bill. A lien. My jaw hit the floor. What is this for? What is this? Do I have to pay this? Is this the seller’s responsibility? I called the number on the bill and the woman I spoke to couldn’t tell me a lot because I wasn’t the owner of the house. I wrote an email to my realtor and CC’d my lender and basically told them all, “If I’m responsible for this $17,000, we can pull the plug on this right now.”

My lender called me immediately to talk me off a ledge. I was so upset. I just spent all this money on the inspection and appraisal and getting the utilities turned on. This house is a great deal. I don’t want to lose it. And I feel like I’m about to because of this lien. My lender explained to me that it’s fine. The lien is going to be paid by the seller, it has to be paid them, they can’t sell the house with a lien on it, so don’t worry. It’s going to be fine. I still had my doubts. The seller had been doing nothing to make the process easier. How do I know this person is going to deal with this lien? They haven’t dealt with anything else. “Stop. Worrying. About it. It’s going to be fine,” he said.

Alright. Fine. I won’t worry about it anymore. 

I’d submitted all of my documents, pay stubs, W2s, tax returns, bank account statements, liquid assets. I closed a week early. 

I’m officially a homeowner now!

Aside from the frustrating seller, the process was pretty painless. As soon as the contract was signed and my realtor sent it to the lender, my lender called me immediately and said he was taking care of everything. And he did. There were never any real problems, just minor frustrations with the seller.

I love this house. I didn’t at first. I passed when I first saw it. No thanks, not for me. It wasn’t in the location I wanted to live, it was bigger than what I’d been looking at previously, but it had all of my limited number of must-haves and a lot of great little would-like-to-haves. The location has its cons (distance), but it has better pros (much nicer area). The cosmetic issues are just that - cosmetic. They’re for things I’d want to redo to be my own anyway (the walls, the floors). I call it my faux fixer-upper.