Auction on Monday.... FIRST FORECLOSURE - Posted by Laure


#1

Posted by Sue (NC) on December 30, 1998 at 12:13:39:

We buy at foreclosure and sell at retail- and we figure in the extra holding costs when we buy. We will take the gamble and do cheap repairs- such as paint- and if we can get the property presentable, we will put it on the market stipulating the IRS contingency, planned repairs, and requiring a closing date after the 120 days.

We look to pay 75% or less (as-is value) at the foreclosure sale, but we handle financing & fixup, and as a Realtor, I’m only out half of the commission.


#2

Auction on Monday… FIRST FORECLOSURE - Posted by Laure

Posted by Laure on December 30, 1998 at 05:34:22:

There is a foreclosure sale on Jan 4. The judgement is for 21,000. The comps are for 59k. I drove by and the house looks good. I called the foreclosing attorney and they would not give me ANY additional information. I am going to the court house in the morning to check it out. My question is this: If this is a First Lien, is that the only thing I pay for? If it is a second, then I have to satisfy it and the first, is that correct? I realize I would be responsible for any IRS or tax liens in addition to the judgement. ANY OTHER TIPS??

Laure :slight_smile:


#3

'nother one bites the dust - Posted by Laure

Posted by Laure on December 31, 1998 at 01:30:05:

I called the foreclosing attorney this morning, and the property was still scheduled for auction on Monday. So, I went to the courthouse and got a copy of all the info. Took it to my attorney, which was right across the street. He called the foreclosing attorney and the property was redeemed at 3 pm today !!! I would have had to bid 33,000 to get the house. It would have been a GREAT DEAL. 'nother one bites the dust ! LOL

Laure :slight_smile:


#4

Re: Auction on Monday… FIRST FORECLOSURE - Posted by Sue (NC)

Posted by Sue (NC) on December 30, 1998 at 07:50:14:

Most city/county property taxes and city assessments will be superior to mortgages and deeds of trust.

Also beware of judgements docketed prior to the one foreclosing.

Make sure the judgement foreclosing is against ALL of the owners of the property; that the interest being sold is not a partial interest.

The IRS liens will not be superior to mortgages/dt created previously, so you do not need to pay them- however the IRS might undo your deal. They have 120 days from the sale date to ‘buy back’ the property at your cost, plus any expense related to securing the property. This is called their Right of Redemption. They do not pay for any improvements you might have made- just necessities like locks and windows.

I’ve found that when buying IRS liened homes, they rarely try to get the homes back. This probably depends on your market, as I see they advertise for bidders in southern California, specifically for the purpose of exercising thier redemption rights.

The IRS doesn’t want to own the homes- they have always been negotiable when I have called them. (I will do this if I want to finance with conventional loans, since these lenders will not lend on property within the 120 day redemption window). The last time I paid them, they took 1500 to give me a letter stating that they would not redeem the property (it had 400K in IRS debt, but I was paying close to 80% of value). But I’ve found that they usually don’t call me unless the deal is stupendous, and sometimes not even then. I just wait my 120 days, doing only cheap repairs.


#5

Re: Auction on Monday… FIRST FORECLOSURE - Posted by Irwin

Posted by Irwin on December 30, 1998 at 07:34:22:

If you go to the sale “cold” and bid $21k and nobody else bids, you’ve probably just made a huge mistake.

Here’s what I would do if I were in your situation.

  1. Call the lawyer and ask “what’s the story”, which you did. What I’m asking for is what is it that’s being foreclosed, and what is the title status as he/she knows it. If lawyer doesn’t cooperate, (A WORD OF CAUTION HERE: MOST ETHICAL FORECLOSURE ATTORNEYS WOULD TELL YOU THAT THEY WERE FORECLOSING A SECOND AND NOT A FIRST MORTGAGE)as in your case,

(Do No. 3 first. It might eliminate need to do no.2)

  1. Examine case file at the Court to determine as much as I can about title, i.e. it should show subordinate liens, because lawyer has to eliminate those; however, he might be foreclosing subject to a superior lien. The pleadings (complaint/judgment)may, or may not disclose that, depending on your local law. Also, talk to the Sheriff’s deputy who handles civil sales. They usually know what the lien represents; however, the Sheriff doesn’t warrant anything regarding title.
    Also, contact someone in the Recorder’s office to show you how to do your own lien search.

  2. Knock on the door and talk to the owners about;
    a) what do they intend to do about the sale, if anything; is the house for sale now? HOW MUCH WOULD IT TAKE TO BUY IT?
    b) what can they tell you about the liens, mortgages, etc.
    c) have other people contacted them about buying the house?
    d) are they perhaps interested in buying the house back after the sale? THIS IS IMPORTANT, because here is your chance to make a deal, reinstate the mortgage, mark up the price and lease/option back to the owners.
    d) anything else you can think of.

Once I’m satisfied that the mortgage that’s in foreclosure is a first, then I can figure on how to deal with the owners and try to get it before the sale. If no deals can be made because of subordinate liens, or uncooperative owner, then I’ll go to the sale prepared to bid against (or deal with) all the other people who have the same idea. That’s why I say that if you’re the only bidder on a teriffic deal like this, you’ve probably overlooked something, like a superior mortgage with a balance of $50k. So be super careful , because not all the glitters is gold, and in foreclosure, it usually isn’t.
Anyway, if nothing else, use this as a learning opportunity and be ready for the next one.


#6

Re: 'nother one bites the dust - Posted by Lee

Posted by Lee on December 31, 1998 at 01:51:39:

If there are no leins on the property and
"otherwise you are satisfiedwith thwe property"
go offer $34,000 for it! TODAY!

Lee


#7

Re: Auction on Monday… FIRST FORECLOSURE - Posted by Reif

Posted by Reif on December 30, 1998 at 11:36:49:

So if there’s an IRS lien you buy the place and keep it empty for four months?

Wow. You must really have to get a great deal to do that.

Reif


#8

OKIE DOKIE - Posted by Laure

Posted by Laure on December 31, 1998 at 08:00:41:

I never thought the possibility existed they might sell… I will run by today. Closed mind thinking from me :slight_smile: Thanks for the suggestion. And yes, the house looks GREAT !

Laure