Where to Start with Foreclosures?

Q: The reason I am writing to you is that I recently became employed, and I am now looking to buy foreclosed homes. Naturally, I expect the homes to need repair work, most of which I can do myself (except electrical). I do not have any real estate experience at all.

Where can I find out about the laws and rights about renting property? Will banks give me copies of their REO lists? Is there anything else I should know about? Where should I start? — J. K.

A: One good place to start would be by taking the prelicense course required for real estate salespersons. Even though you’re not looking for a license, it’d give you a thorough background in real estate. And some of your classmates might be interested in your goals and want to start out by working with you.

As for foreclosed property —yes, it’s sold at public auctions. Anyone can attend, anyone can bid. Information is available from advertisements in classified ad notices in local newspapers.

It’s not quite that simple, though. Procedures vary from one area to another. As a real estate investor, you’ll want your own attorney, and you need legal guidance in local requirements right from the start. Yes, there may be bargains to be had, but you must usually pay in cash. The rules vary from one jurisdiction to another, but you’d probably need an immediate cash deposit and the rest within a short time — it might be anywhere from 24 hours to 30 days. It helps to have a line of credit already set up.

One drawback is that you can’t always view the interior of the property ahead of time. You might, for example, buy a place without realizing the copper pipes had all been ripped out and sold for scrap.

You ask about REOs — real estate owned properties that banks have acquired through foreclosure: I’m no expert on those, but I suspect it’ll help if you have good credit, employment history and income. And your own attorney.

A common way to start is by finding an older investor who is tired of being a landlord, or tired of flipping houses, and ready to mentor an energetic young partner. To locate one, try talking to real estate brokers. You might meet them by walking in to open houses. If no buyers are there and an agent is sitting alone and bored, it’d be a good time to discuss your ambitions and your needs. You might well find a broker with suggestions and connections to help you get started.

One Signature Enough?

Q: My parents died and left their house to the five of us. I had each of my siblings and their wives write and sign a note stating they were in agreement to have me take care of the selling of the house and act as their representative in signing over the house when it is sold (not notarized). We did this since the brothers live in different states and felt this would cut down on complications at sale.

The real estate people I am working with don’t seem to really know if this will work. The lawyer with my parents’ estate stated that because I am the executor of the will, that should suffice (though the will did not say the house had to be sold).

Presently, the house is showing frequently and I expect an offer may be made soon. I don’t want anything to delay the sale of the house. Would you advise that I get a limited power of attorney from each of them? — askedith.com

A: If the house is presently owned by the estate, your signature as executor should be enough to take care of a sale. If it were already in the names of all of you as co-owners, all five signatures would be required to put the property on the market, again to accept an offer, and then to sign the deed that finally transferred ownership.

You ask what I advise: Rely on the estate’s lawyer, who has been through this before and knows what’s needed. Those real estate people you’ve been working with shouldn’t be giving you legal advice —for that matter, I probably shouldn’t either.

Edith Lank will respond personally to any question sent to www.askedith.com or to 240 Hemingway Drive, Rochester NY 14620.