Q: My Dad lives in Denver and told me I should buy a "foreclosure" house in Grand Junction. I have a good job so I have some money but I don't know how to buy one of those. - John in Fruita------------------------A: It is very timely that you ask that question now. Last week Paul Brown, the Mesa County Trustee, spoke to a group called the Real Estate Investors Network (REIN) about just that topic. If I were to summarize Brown's 40-minute talk into two phrases they would be these:• Do your homework; and • You must have cash or verifiable funds on the day of the sale to make your purchaseAs for doing your homework, he was saying that as the guy who conducts the, nearly weekly, auction of foreclosed properties, his small office staff does some research into them but they do not necessarily know or share with prospective bidders a lot about the properties that come across their desks.There may be a second mortgage, mechanics liens or other title "encumbrances" on a property you and others may bid on. His recommendation to solve this situation is that if there is one house you really have your eye on, you might want to pay a title company a few hundred dollars to run a title search and report to learn if anyone - a second bank, a contractor, the IRS - has any rights to "redeem," allowing them to swoop in and buy the property after you think you have already purchased it. A second lienholder has that right for eight days after the sale.In Mesa County, many of the properties in foreclosure have more, or even way more, owed on them than they would sell for in the normal home sale process so you need to know what you are getting as far as value. You wouldn't want to buy a home for $205,000 at the auction that, if you were to want to sell it three, six or twelve months later, would only bring $145,000? You can get some information on value from web sites like Zillow or Trulia. Perhaps more accurate, but very time-consuming would be to research the Mesa County Assessors website. Your most accurate information might be obtained from a Realtor who has access to a large database of recent sales.Brown talked about other elements of homework, too, but I think you get his point that there is a lot more for you to know than the address of the property and that you like the neighborhood it is located in.As for payment, in order to buy a foreclosed property, you have to be able to pay for it before the end of the work day of purchase. To do that you will not be able to use a mortgage loan. Cash or a certified check is the means of payment most often used. Most of us do not have that kind of money available so that cuts down greatly on the number of people who can put in bids on the 1,200 or so homes that passed through the foreclosure process last year; and that, Brown estimates, we will see in Mesa County again in 2012.Of those foreclosures only about 5% even receive a bid on auction day. Most are essentially taken back by the bank and will be turned over to one of the local real estate companies to be listed for sale within the coming two to six months. Those bank-owned properties you can often get a mortgage on and treat in most other ways like any other home for sale.Before you attempt to buy a foreclosure in GJ, be sure to heed Mr. Brown's advice.--------------------------------Doug Van Etten is a local Realtor with Keller Williams Colorado West Realty. He is also the organizer of the Real Estate Investors Network of Western Colorado (REIN). For information about buying or selling a home, investing in real estate or joining REIN, Van Etten can be contacted at 970-433-4312 or email@example.com.
Local real estate Q&A: How to buy a foreclosure in Mesa County
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