verbatim 1 Report post Posted November 1, 2008 How would i figure out what the banks "cost to foreclose" would be on a property? Is their a general formula of some sort that one could use? Share this post Link to post Share on other sites
MichaelC 160 Report post Posted November 1, 2008 I recall reading an article last year, (maybe summer of '07), where FreddieMac said the average cost to a lender to foreclose is $60K. They didn't get into much details or offer any formula. The article just threw that figure out there as fact, so take it as you will.After a little digging around I also found this recent article: Cost of Foreclosures Share this post Link to post Share on other sites
Doug Pretorius (ON) 9 Report post Posted November 1, 2008 Here in Ontario it's about $25k according to a lawyer I talked to about it a few years ago. Share this post Link to post Share on other sites
Real Estate Invest 0 Report post Posted November 23, 2008 I was an account exec for a hard money lender for about 5 years, so I can tell you firsthand that foreclosing is extremely expensive. As for how expensive, it depends on the amount of the loan, and the state/province/country, as each has different time periods and legal requirements. In my home state of MD, the miserable governor (same @#$% who raised sales tax by 1%) forcibly extended the amount of time it takes to foreclose from roughly 2-3 months to 6-8 months, in a misguided attempt to keep homeowners in their homes. What he failed to realize, of course, is that he made the local credit crisis more severe, because banks and mortgage lenders put a freeze on their lending, but never mind. Anyway the lender has to carry the loan from the date of default until the date of foreclosure, which is another several months on top of the amount of time it takes to foreclose. So assuming 9 months of carrying costs (principal, interest, taxes & insurance), plus legal fees (typically in the $5K range), plus advertising expenses for the auction (another $1-3K), and in some areas part of the closing costs. If it doesn't sell, then they have to pay to have title transferred, and then carry it even longer, and then pay a realtor to sell it. Hopefully that answered your question, good luck bidding, and by the way here's a good article with tips on Buying Real Estate at Foreclosure Auction.Cheers,Junior Share this post Link to post Share on other sites