house in foreclosure-question - Posted by markTN

Posted by Michael Morrongiello on February 08, 2000 at 11:44:59:

If the lender is now doing the evicition of the occupants it sounds like the “hammer has fallen” and that the courthouse auction has already taken place with the property going back to the lender. This now becomes an REO property for that lender.

You can always make an offer to purchase the property for what you feel will allow you to make a profit after fix up and resale. The bank may turn you down now at YOUR offered sales price but usualy if that property sits for a while they will then entertain revised offers.

If they were willing to finance you with No cash down at the $45K sales price under favorable financing terms then you might consider that as another way to acquire this propertuy with financing already in place.

Remember one of the cardinal rules for investing in Real Estate that goes along with Location, Location, Location would be ; YOU MAKE YOUR PROFIT WHEN YOU BUY… if the sales price that bank wants and what you’re willing to pay don’t allow you to earn a profit pass and move on. There are plenty of opportunites out there.

Michael Morrongiello

house in foreclosure-question - Posted by markTN

Posted by markTN on February 08, 2000 at 09:22:39:

Just went and looked at a house in foreclosure. The house is worth 60,000. I called the mortgage company holding the loan and they stated that the owners are in foreclosure and that the eviction process is about to start. The payoff is 45,500 and they are not negotiable on this.

My question is what happens next? I know this is too skinny of a deal, the house is nice with little fix up needed and all comps show 60K plus. What happens to the house now, does the lender just market it retail, do I have room after they’re evicted to deal. Any help is greatly appreciated!!!

Another Possibility - Posted by Paul_NY

Posted by Paul_NY on February 08, 2000 at 23:45:09:

If your area is like mine, houses stay on the market for an average of 6 months in excellent shape, longer if they have a bad curb appeal.

In my area, I would wait until the bank owns it. Then make an offer of less than 45k.

Best of Luck

Re: house in foreclosure-question - Posted by Ed Garcia

Posted by Ed Garcia on February 08, 2000 at 13:18:57:


The numbers tell you what to do. For example, you have already told us that the
Market value of the house is $60k. the pay off is $45,500. which gives you
the difference is $14,500.

That’s if the sun is shining, and you can sell it tomorrow, which is not the case.

You don’t tell us what the payments are? , and what it would cost to cure the loan?
Cure the loan means, bring all the payments up to date. Usually when someone
is behind on their payments, their behind on their taxes as well unless the taxes are
already included in the payment.

Of course we don’t know the market of your area or any information vital for us to
make an intelligent decision. Normally if I thought that this was a hot deal,
I’d ask you to call me.

I’m not asking you to call me, so that tells you what I think of your deal.

But there could still be some possibilities for a FLIP, or to take over payments and
sell it on an LEASE OPTION. That’s why I mentioned what are the payments on the
existing loan. It’s important to know if when all of this is done, you are competitive
with market rents. If so, you might have a DEAL with a positive cash flow.

You need to learn how to pencil a deal.

For example:

Let’s say the monthly payments are $500. If the property is 3 month behind then there is
$1500.+ foreclosure fees of lets say $1000. Lets say to cure it, it would cost, $2500.

Lets also say that it’s going to take us 4 months to sell it. That’s another $2000 in debt service.
You mentioned a little fix up. Lets say another $2000.

That’s already $6500 and we haven’t even blinked an eye. If we can’t sell it ourselves, then there
is another 6% commission, which is $3600. Your deal just went bye bye.
There is more to take into consideration when penciling a deal, then what I just said. I was just giving
you and example of the procedure.

A Flip or Lease Option is the only way to fly.

Ed Garcia