Next Door Foreclosure

[jospaced]

Just found out that the condo unit directly next to mine is in foreclosure. These are nice units; and in the time I have been here I cannot remember any other foreclosures. While I am not currently planning to sell, how will this affect the value of my home? Anything else I should worry about?

[Deleted]

Who is living in it?

[8 Bit WWBG]

...:::"While I am not currently planning to sell, how will this affect the value of my home?":::...

You just asked and answered your own question. It looks bad on paper, but is a non-issue if you are not selling or planning to take out equity.

...:::"Anything else I should worry about?":::...

Pray that this foreclosure is a one-time fluke, and that everyone else is still solvent

[jospaced]

The owner is a single woman, 60ish, who lost her FT job a few years back and has been working part-time retail since then.
I don't worry too much about the general solvency of the community; many are local retirees who sold their homes and "downsized".

ETA: Maybe I'm overreacting here. She has had animals running around. I am afraid she will just take off and leave them. Also, I fear that she is not taking care of her unit and that might breed who-knows-what.

[wodehouse]

HOA fees on foreclosure units are often left hanging...the HOA can try to sue to recover costs, but they just stand in line with everyone else. The real problem is when a large percentage of units in a condo or development are in foreclosure and their HOA fees are not being paid. Then the owners left must pick up the tab for the common fees (elevator power/maintenance, insurance, maintenance, lawn, roof, etc), which could get expensive. Just pray the one foreclosure isn't the tip of an iceberg. On the other hand, maybe it's a good opportunity for you to invest (rental unit?).

[jospaced]

Rental unit.....hmmmmmm.

[Deleted]

My wife is on our HOA board it is surprising how many in our neighborhood are behind on their HOA payments. I also noticed in our year end financials that our HOA wrote off outstanding bills over a year old.

[Deleted]

Depending on the HOA fees are structured, they could be a lien on the property or the person (owner). Most banks pay the back HOA fees, the problem is the in-between. The current owner may have not been paying her HOA fees for months and as the previous poster mentioned it can be a problem.

With many down-sized retired folks it seems unlikely you will see many foreclosures (assuming the retirees paid cash). I own a condo in a similar situation. However there have been at least two that I know of.

[jospaced]

The HOA publishes an "aging" of fees owed. There are none in the over 60 day category. There is also a very strict policy regarding fees in default. The HOA will not hesitate to start foreclosure proceedings if the maintenance fees are not paid. The by-laws don't allow for "write-offs".

[jospaced]

So far, neighbor is making no move to leave. What happens in a case like this? Do they physically remove her? Will this happen sometime prior to the auction?

[Deleted]

If she doesn't move by the time of the auction the bank or purchaser will have to go through the process of eviction. Some States have passed laws to protect renters caught in this situation. I think most banks will do a "cash for keys" deal wherein they'll pay her something like $2,500 in return for the keys and not trashing the unit.

[midjd]

I'm not sure what state you're in, but it depends. In a judicial foreclosure state, the case is filed, the defendant usually makes no move to contest it, a default judgment is issued, and the case is set for sheriff's sale. After the sheriff's sale, the defendant usually has 5-10 days to vacate. If they don't, the sheriff will physically remove the defendant's belongings and place them outside, and change the locks.

So depending on where she is in the foreclosure process (the judgment may not have been issued yet) staying put is not a problem. She will still be liable for maintenance, HOA, taxes, etc. until the unit is sold - so abandoning it prior to the sheriff's sale could present a problem. (I've seen cases where the borrower left the house prior to the sale, it was trashed by vagrants and all the plumbing and appliances removed, and the borrower then got stuck with a HUGE delinquency. Better to keep an eye on things until you no longer legally own the place.)

You might start checking the local paper for sheriff sale notices - once you know when it is, you'll have a good timeline for when she'll be out. And you can always bid on the unit yourself

[jospaced]

Thanks for your replies. According to the State website, this process has been going on for over a year. She never appeared or responded. The sale is in June and has been published. I'm really afraid she'll do something stupid; she's not the most stable person.

[973beachbum]

Maybe it is me but there isn't a lot I would want less than a rental right next door to me.

[jospaced]

I briefly thought about buying this as a rental unit but quickly dismissed it.

[The J]

Will it have an impact on the value of your property? In the short term, maybe, in the long term, no.

[Deleted]

"According to the State website, this process has been going on for over a year. She never appeared or responded. The sale is in June and has been published. I'm really afraid she'll do something stupid; she's not the most stable person"

Yeah, unfortunately some people are in complete denial when it comes to selling/moving from their home. I once had a (voluntary) seller come to my door threating my mother (the listing agent). Her husband got her to calm down but it was a really weird situation.

That's reason they have people wearing guns do evictions.

[Deleted]

Why would this be a problem?

Lone are you a LL now?

No way would I want a rental next door. 1) They will complain about every little thing for you to fix. 2) I really don't want them seeing my cars, my furniture, et cetera and decide I can afford to lower the rent because "you have lots of money". And I don't want to see their business either.

We did keep our old house for 9 months when we moved up the street 4 doors away. My MIL moved into it. Every week there was a complaint about something and "could we stop by on our way home from work".

And on a financial level I'm not keen on having too much money tied up on one street in the event you have a problem neighbor who brings down the neighborhood.

[midjd]

I definitely see your point, Bonnap. But would a condo be any different? The HOA fees take care of maintenance-type things, correct? I'm sure there would still be problems, but it seems as though it would be slightly more workable with a condo than a SFH.

There is the issue of having all your $ tied up in one place, though - that's a biggie. Especially if your HOA fees rise as more people default.

[The J]

May 25, 2011 11:34:02 GMT -5 midjd said:

I definitely see your point, Bonnap. But would a condo be any different? The HOA fees take care of maintenance-type things, correct? I'm sure there would still be problems, but it seems as though it would be slightly more workable with a condo than a SFH.

There is the issue of having all your $ tied up in one place, though - that's a biggie. Especially if your HOA fees rise as more people default.

HOA fees take care of exterior maintenance and common areas. All the internal stuff is on you. Having your LL next door is convenient if you don't want to ever plunge a toilet.

[TheOtherMe]

Many years ago, I purchased a house that had an HOA. The only thing the HOA did was have a pool. It did nothing else. The people from whom I purchased the house were way behind on their HOA fees. There was a lien against them and it was taken out of their proceeds at closing. First time I went to use the pool, I was told I couldn't as that address hadn't paid their dues. I told them I was a new owner, dues had been paid at closing. They let me swim and said they would check on it. No further problems.

[midjd]

Ah, gotcha. Yeah, that would be a downer if you had needy tenants. Our LL lived next door when we were renting, but we were very low-maintenance so I don't think they minded

[Deleted]

"you live out of the area, of course, which is probably the best way"

Heh, heh and a 9 hour time difference. ;D Of course on a serious note there are issues about being that far away too.

"HOA fees take care of exterior maintenance and common areas. All the internal stuff is on you. Having your LL next door is convenient if you don't want to ever plunge a toilet."

Exactly. All of the last 10 tenant complaints have been about internal issues; plumbing or appliances failing (and they are nice < 5 year old appliances).

[973beachbum]

May 25, 2011 11:20:03 GMT -5 @lonewolf said:

May 25, 2011 11:05:43 GMT -5 @bonnap said:

Why would this be a problem?

Lone are you a LL now?

No way would I want a rental next door. 1) They will complain about every little thing for you to fix. 2) I really don't want them seeing my cars, my furniture, et cetera and decide I can afford to lower the rent because "you have lots of money". And I don't want to see their business either.

We did keep our old house for 9 months when we moved up the street 4 doors away. My MIL moved into it. Every week there was a complaint about something and "could we stop by on our way home from work".

And on a financial level I'm not keen on having too much money tied up on one street in the event you have a problem neighbor who brings down the neighborhood.

I see your point, but from what I've experienced, it really doesn't matter whether or not you're living next door, as the tenants always seem to know your business and have access to a phone in order to bug the heck out of you, anyway. That is unless you live out of the area, of course, which is probably the best way.

I just think there is a certain amount of distance that I want with my tenant if I were to ever get one. No way would I want my LL living next door watching every move I make or have my tenant next door bugging me for every little thing or maybe finding out more about me than I wanted. It just sounds like it could be a recipe for disaster. JMO ;D

[2kids10horses]

For all my tenants know, I live in a P. O. Box.

They do have my phone number. But they rarely call.

[jarhead1976]

Next door neighbor, a few weeks ago told us he is walking away from his home. He is over the top. That makes 1 in every 5 homes vacant in our subdivision of @ 180 homes. Told me he has not been paying his mortgage for 8 months.. Mortgaged in at 175.000 house worth today maybe 130,000 or what ever the bank can get from it.