FORECLOSURE = 1ST DEAL??? - Posted by Tom NH

Posted by Tom NH on April 15, 2006 at 08:48:04:

The auction ended up being cancelled. There was another one later on that afternoon right up the street from where I’m living that I went to.

The auctioneer showed up and there were 2 other investors there. That one ended up being cancelled as well, but as I was waiting for the auctioneer to get out of his car, I ended up networking with the other 2 investors that were there.

I’m adding them to my buyers list as they said if I come across anything that I want to get rid of, to give them a call. Thought it was worth going, just to meet the people there.

In a way I’m glad that second one got canceled because the people were still living there, and there was young boy standing in the door wondering what all the people were doing out in front of his house on Good Friday. I thought it was kind of sad.

But on that note, should I follow up with the home owners and see if they’d be willing to sell? I believe they owe $226K on it and there are 3 other neighboring houses that are going for $230K-$240K. Would this be too late in the foreclosure process to work a short-sale? The other thing is, I’m not sure why the auction ended up being canceled. I’m wondering if they brought the payments current or if another investor bought the property from the bank before the auction.

  • Tom

FORECLOSURE = 1ST DEAL??? - Posted by Tom NH

Posted by Tom NH on April 13, 2006 at 18:41:35:

I’m trying to find my first deal, and I think I might have one. Here’s how the story goes:

Back in December I was under contract to buy a house for myself and my fiance. The seller owed close to $250K, and couldn’t make his payments. He had it listed w/ a Realtor initially at $240K, then dropped his asking price to $219K, hoping he could work a short-sale with the lenders.

When it came time to close, the lenders wanted more cash up front from him, and the deal ended up falling through. When I got the appraisal back and it came in at $221K.

I have a subscription to a paper that comes out each week which lists all the sales, auctions, etc. I was sitting in my car at lunch time today listening to one of Ron LeGrand’s cds on Quick Turn Real Estate while reading the “Registry Review”. As I started browsing over the auction sales, I recongnized the property address that I was under contract for back in December. The seller ended up going into foreclosure, and the sale is tomorrow (thought it was weird how it happened to fall on my day off!)

Anyways, here are the numbers:

ARV $220K
MAO = 220K X 0.70 - $5K in repairs = $149K

I know the house is in great shape, it just needs 2-3 window panes replaced, a couple of carpets, and that’s about it.

If what is owed to the bank is ~$240K-250K, what are my chances at getting it for around $150K at the auction!?!?

Oh, it’s a 4 Br, 1 BA, 1500 SF cape, w/ inground pool, lawn irregation, on approx 0.25 acre lot in decent area.

I don’t even have money to go to the auction, but told my brother about it and he’s interested so he has wired $5K to my bank account and he’s in Iraq!!!

I figured what the heck, go and see what happens. The worst that could happen is that I get out bit.

Let me know what you experience investors think. Thanks ahead of time for your feedback

Re: FORECLOSURE = 1ST DEAL??? - Posted by brandoncbsre

Posted by brandoncbsre on April 14, 2006 at 06:18:29:

I am not sure how it is your state, but I can tell you about Indiana Sheriff sales. The vast majority of properties ended being “bought” by the bank that holds the mortgage. The reason for this is that most properties don’t get bid up to the amount that is owed. By taking the property back at auction the back can sell it through a Realtor at a “discount”. Most mortgages are insured these days, either through the government agencies or with private motgage insurance. Therefore the bank sell at a loss and I believe the mortgage insurance picks up the tab. On another note even if this would go for $150k you’d be SOL with that $5000. Most auction require 10% day of auction with the balance due in 30 days. If I’m not mistaken the Sheriffs sales here require 100% cash day of sale. Your best bet is to wait for it to end up with a Realtor. Going to the auction could a good educational experience for you so I would recommend doing so. Hope this helps.

Re: FORECLOSURE = 1ST DEAL??? - Posted by Tom NH

Posted by Tom NH on April 14, 2006 at 06:29:02:

Thanks for your reply,

Here in NH, It is Mortgagee Auction. In the paper that I have, it specifies the terms of the sale. In this case, it’s $5,000 at sale, balance due in 30 days.

I’m going to attend another auction at 11am this morning to get a feel for how it works.

Re: FORECLOSURE = 1ST DEAL??? - Posted by Natalie-VA

Posted by Natalie-VA on April 14, 2006 at 17:31:39:

So how did it go?