15k into it with Auction looming!! - Posted by Mark

Posted by Natalie-VA on May 03, 2005 at 19:47:49:

Sounds great, but that is not the norm. Maybe you could pass the name of the lender along to the poster since he could benefit from that scenario. I was just trying to give him the most realistic safe advice I could since time is of the essence.

15k into it with Auction looming!! - Posted by Mark

Posted by Mark on May 02, 2005 at 22:24:12:

I have a house and the deed that has recently been released from bankruptcy. The sellers have already been given their payoff amount (10k) and have moved. The house has been rescheduled for auction on 6-2-02. The problem is that I have already done a bunch of work to it with the hope of selling it before the new foreclosure date and now I am a total of 15k into it. I have faxed over my Authorization Form and am going to try a short sale (to possibly buy some time) realizing that it is not in “short sale condition.” Question: If the house will appraise for 135K and my pp was 99k, can I record the deed and refi to pay off the lender their 89k? Please help with any ideas.


Re: 15k into it with Auction looming!! Postponed - Posted by Mark

Posted by Mark on May 03, 2005 at 22:43:12:

Thank you to all who responded. I spoke with the loss mit/foreclosure technician today (Countrywide) and they are going to postpone the sale 45 days from the foreclosure date. So I now have roughly 65 days to get new financing on the property.

I do want to say that the only reason I did this deal this way was because the last deal I did was “somewhat similar”. The previous deal was gotten under contract by me and sold by me via limited power of attorney before the foreclosure date deadline. However, the difference was that the previous deal seller had just received their Lis Pendens and the foreclosure sale was not looming.

I knew I was taking this risk on this current deal, but “thought” I could pull it off as quickly - not the case. I have learned my lesson! Thanks . . . I’m sure I’ll be back for your expertise.


Re: 15k into it with Auction looming!! - Posted by Natalie-VA

Posted by Natalie-VA on May 03, 2005 at 13:41:23:

Your response:

I was plannig on recording the deed at 90k (I gave the sellers cash), and
then refi at 70% LTV because the property is currenty worth 135K (135K x
70% = 94.5k) Obviously there is no seasoning. Will the refi be based on
the appraised value (135K) or the recorded value (90)K? Am I correct in my
thinking? Please help.

Since there is no seasoning, your lender will base the refi on the appraisal or sales price whichever is lower…in this case, your sales price. Sorry.

A little different take… - Posted by SeriouslyStubborn

Posted by SeriouslyStubborn on May 03, 2005 at 13:26:48:

I don’t know if this applies to you or not Mark, but I think it at least needs to be mentioned. Sometimes its better not to throw good money after bad money. Take the rose colored glasses off, forget that you have $15k in the property, and decide if you can afford to spend any more of your money to try to save what is already effectively lost. What’s the payoff on the home after all the fees that were sucked up in the bankruptcy. My belief, based on experience, would be they are probably higher than you think. I’m not saying don’t try to save your money, just be open to the option that this may not be the best thing to do with your time or your money.

Just last year I gave $5k to the homeowners of a property, and when I really got into it and realized what it needed, I realized that I no longer had a deal and ended up walking. I COULD have gotten my money back PROBABLY, but everything would have had to work out just right, and I would have had to throw a lot more money and time I didn’t have at it. My decision was to walk from the deal. Well, actually I sold it to another investor for less money than I had into it, so I lost all my investment. But, at least the homeowner didn’t have a foreclosure on their record.

Good Luck to you,


Re: 15k into it with Auction looming!! - Posted by RichV(FL)

Posted by RichV(FL) on May 03, 2005 at 10:36:50:


At this point you need to get financing for this property before you lose the cash you have into it already.

As Phil mentioned a SS would be great but time is not on your side at this point.

Even if you have to go to hard money do it for now. Dont lose what you have into this.


Re: 15k into it with Auction looming!! - Posted by Natalie-VA

Posted by Natalie-VA on May 03, 2005 at 09:10:39:

Have you gotten beat up enough yet on this? Okay, now to get you out of it…

Take Dave’s advice. Forget the short sale; get your deed recorded and go for the refinance. Go to a local bank; do not use a mortgage broker. Tell the local bank how long you’ve owned it, so they can check their title seasoning issues up front. You can’t afford to get that answer later. You should be able to get a 90% loan of 89k based on your purchase price of 99k. You will have to pay PMI. Hopefully you have decent credit and income to make this happen. I think it’s really important to work with a local lender on this one.

Something about writing checks that bites back - Posted by DaveD (WI)

Posted by DaveD (WI) on May 03, 2005 at 08:43:55:

One of the things LeGrand preaches comes to mind here: Only two ways to lose money are to write big checks, and personally guarantee debt. If you don’t want to lose money don’t do either one!

Next time wave maybe $500 in the sellers face. If they need 10K to pull the trigger, wave $500 in front of their face anyway, and tell them they will get the rest when you sell or refinance. Ugh, that just saved you $9,500 out of pocket. The fix-up costs go without saying… don’t spend a dime on a future you cannot control. A looming foreclosure would fit that description.

Your trouble is entirely self-imposed. Doing it this other way may have meant as much as $500 out of pocket. Not an insignificant sum to lose, but not so much as to lose discipline so you are forced to lurch around trying to save your a$$.

You didn’t say what your goal was when you bought in the first place. Was it to re-sell and cash out? If so, and you have recorded the deed, and you are correct on your numbers, and you have a good relationship with a small local bank, you “should” be able to re-fi and get most of your cash back out. Go for short term, interest only. At least you will protect your position, even if you don’t immediatly get any of your cash back out. Live and learn, and move on. Hopefully you can get the re-fi done. Good luck.

Re: 15k into it with Auction looming!! - Posted by phil fernandez

Posted by phil fernandez on May 03, 2005 at 07:52:15:

Sure a short sale would be nice, but you are fighting the clock here. You’ve only got 30 days to close on this deal. I’d be concentrating more on getting financing on the property so you don’t lose your $10,000 you gave the owners and the $15,000 you put into the house with the improvements. Depending on your local market, short sales are always a crap shoot. In hot markets not many banks are going to short sale and some banks don’t do short sales at all so don’t count on the short sale to bail you out.

I’d never sink money into a property that I didn’t own yet. Way too risky. Let us know how you make out on this one. As JT said, you’ll need a lot of ducks to fall in the right order.

When you get out of bed first thing - Posted by JT-IN

Posted by JT-IN on May 03, 2005 at 05:09:03:

The first thing You do in the morning is put your shoes on… then get dressed, then get in the shower, then eat dinner… and several hours later you think about eating breakfast…

Of course that day is sequentially wrong and out of sinc… even a 7 year old would know that. I only post this ridiculous metaphor to compare it to how out of sinc your RE deal is… That may not help you today, but before you attempt another one of these deals, make sure you know the proper sequence and if you implement the deal in the proper sequence, you will see a vast difference in the end result.

For now, you must find a way to get financing or you will see 15K or more go down the drain. I suppose that you must have thought about how you would finance the property if it didn’t sell…?

BTW, the best time to seek a short sale if PRIOR to making improvements to the property. Also, do not mention to the lender that you have the Deed to the property, nor record it prior to closing on a short sale… or else that will nix your ss. At this point you may have to have too many things fall into place simultaneously to still seek the ss from the lender, as the most paramount isssue is mtg financing…

Sure, you can record the Deed and refi, but this kills any attempt of a ss… Again, you may not have enough time ofr a ss at this point anyway… depending on who the Lender is…

Good luck on this one, but better luck on the next one… if in fact you can preserve the capital enough to have a next one…


Re: 15k into it with Auction looming!! - Posted by John P

Posted by John P on May 03, 2005 at 03:20:37:

Mark, have you tried a hard money lender? I would move very fast and get new financing on this one. Will the bank re-instate the loan?


Re: 15k into it with Auction looming!! - Posted by rehabber

Posted by rehabber on May 03, 2005 at 19:39:44:

Is this always true??? I think not.
Last year I got a condo at a Sheriff Sale for $60k
(paid cash obviously since it was sheriff sale)- it
was worth 100k as-is before repair…anyways…
right after I got the Sheriff Deed (zero seasoning)
I got a stated income loan for 75k for cash out = 75%
loan to value for appraised value NOT paid price- so
I got the loan for the HIGHER of the two, not the
lower of the two. Yes- it was a ‘regular’ mtg-
not a hard money loan.

Good Point nt - Posted by phil fernandez

Posted by phil fernandez on May 03, 2005 at 14:02:41: