When you buy a foreclosure, letting the people stay in the house is a dangerous thing to do. If they didn’t pay the bank why should they pay you? There is a good chance of getting into a nasty eviction and being looked on as an old meany who is throwing them out of THEIR house.
The best thing is to make a clean break, and buy only on condition that you get vacant possession the day you buy. If they aren’t out of the house, they don’t get the money and you don’t sign the papers. It will always be “just a little while” and “just one more day” for some people.
Could you rent it easily, and for more than enough to cover the expenses and the payments?
I posted this earlier today but got no response. If there is not enough info or I am doing something wrong here please letme know. No offense will be taken.
I have a possible first deal in the works and am meeting with the sellers tonight (postponed until 3 Apr 5:30). Here is what I know after talking with the wife on Monday 1 Apr.
House is a 4 bedroom 2 bath 1900 SQFT in a nice neihborhood.
The Grant Deed is in the husband and wife?s name.
The loan is in the husband?s name.
They are getting divorced and its final 16 Apr.
Judge told them if they don?t sell the house then who ever stays must buy out the other party. They have choose to sell it.
They had the home listed with an agent for $214K house did not sell (listing expired in Feb)
Here are the numbers that I know at this time:
Appraised (Sep 2001) $225K appraisal was done for a second mortgage (probably high). They did not get the second.
Recent sales (off the internet) $195-$210.
Property profile ran with title company today. Recent sales were $228K High, $185K Low (3/2), and $202K Average
Home bought in Oct 98 for $150K.
Monthly Payment $1,387 PITI.
They are behind $14,494. NOD filed 7 Mar 02
Here is how it looks:
Selling price: $200,000
Loan Balance (Approx): $146,000
Equity: $54,000
Rears: $15,000
Net Equity: $39,000
The $15K NOD must be cured! What are a couple of options I could do to make this deal work? $15K is alot to cover. Although, there is plent of equity.
Some additional info:
The lady did not know alot about the loan because she would pay the husband and he would make the house payment. Yeah right! She moved back in with him last summer and she said the payments were behind by 6K. They decided to file Chap 13 and included the 6K in with the filing. At the last minute he decided not to file Chap 13 and she filed on her own. I don?t think he has made a payment on the house since then. I found out today that the 6K she included in the Chap 13 was included in the the $15K NOD. Any help would be appreciated.
They have no equity. Traditional costs of sale, the existing amount of back payments, and the continually added costs will turn most of their imagined equity to vapor.
My offer would be to take over the mortgage payments and pay the arrearage. If they’re broke, pay closing costs. $200,000 would never occur to me.
If they are both living in the house will the judge make them buy out each other’s share?
What would you do if you bought it? Live in it, rent, resell?
I don’t know your local market but it sounds like it would be impossible to rent for enough to cover your expenses, therefore you would want to resell.
Does it need any cleanup or repairs in order to make it a readily saleable showplace? If so you must deduct that from the value.
Right now it looks like it wouldn’t be worth having even if they gave it to you. The rule is that you shouldn’t pay more than 70% of FMV if you mean to resell at a profit. That may sound excessive but there are a lot of expenses that will eat up your profit.
The more expensive houses are usually harder to sell. Could you carry the payments for 6 months without losing your will to live?
Could they pay off the $15000 and deed the house over to you?
Then it might make sense, if it isn’t in too bad of shape.
Thanks for the response. I know alot of their equity would vaporize. I will find the exact numbers today. There divorce is final 16 Apr. During the divorce, the house was listed with a realtor but did not sell. The judge said if who ever wants to stay in the home, the other has to buy the other party out. They have decided to sell. The wife was the first to approach me about helping her find a home. I asked how she had heard about me and she showed me the postcard I was mailing to NOD owners. I then started talking to her about her house. She did ask if she could buy the home back from me if I bought it. I am in California and Foreclosure laws are strict. Is some one experienced at Foreclosure Bailouts?
Thanks for the response Glen. I had planned on putting someone else in the property. Although, It is only a few blocks from my house that I live in now and is larger. The thought of moving in and renting my place out did cross my mind. As far as rents, the house could rent for $1,500 to 1,6000 a month. Not a whole lot of cash flow considering marketing and maintenance. I have not had a chance to walk the property but will tonight when we meet. This home price is in the average range for homes in this area (socal). If they could pay off the $15K they probably would have already done so with the bank. Even if they did and then deeded me the house, I would be in violation of civil codes that protect homeowners in Foreclosure. What I was thinking was get him to sell for around $160K allow him to stay in the property for a couple of months (making the monthly payment) while I market the property to get a L/O buyer. Contact the lender and get a forebearence on the rears. Any thoughts? Once again I will have good numbers after this evening. The Lender is faxing the status of the account.