My 1st distressed property - Posted by JohnK(CA)


#1

Posted by Jim IL on February 28, 1999 at 17:26:39:

John,
I recently dealt with a property that had many of the same things as yours does. I lost mine to another offer that went in the same day, but I learned from it.( a day late and $1k short, oops.)
Anyway, mine also had a FMV that was hard to figure. The recent sales in the area ranged from $100k to $200k, all homes with approx. the same square footage and layout, just different architectural designs.

I decided to not get an appraisal,(why spend money when I didn’t need to, besides appraisals are usually biased, in my opinion) but I did get permission to have the home “inspected” prior to making my offer.

Anyway, during these 3 days, I had 3 different RE agents do FREE market analysis, and this is what I used to help me determine the FMV coupled with the recent sales in the area.(maybe that extra time killed me, not sure, next time I’ll do this all in one day, at different times of the day).
All 3 Market analysis came back within 2k of each other. The gave me an as-is price of $110k. (I offered $90k and it went for $91k., again, I should have made my offer right away, and included the “weasel clauses” in the contract, in case my market analysis came back not in my favor.)
The part that killed me was the fact that this was a home that was owned by the 2 surviving heirs of a deceased man, and I was told it would take 2 days to get both parties to approve the offer. It only took them a few hours that same day to accept the other offer.
Perhaps you can try this approach. The agents in the area are usually pretty familiar with the market and can help you.
Good luck, and get an offer in quick. Also, make sure that you speak with both the husband and wife.
Make nice, and perhaps they will too.
And if it won’t go your way, move on. There are others out there, we all just have to find them.
Jim


#2

My 1st distressed property - Posted by JohnK(CA)

Posted by JohnK(CA) on February 28, 1999 at 03:23:13:

I have talked with an owner of a house that has a FMV of 138K The balance on the 1st is 119,500 He was recently told that he will be out of work in 28 days. He is also recently separated from his wife who is losing her job too. He is still in the house, but wants to just give me the place, so he can leave when his employer lays him off.
The piti is 1125/mo. The loan is not assumable, so I would propose just taking the property subject to the 1st,having him and his wife assign the impound account, (no prorations) and placing it on the market immediately for a quick sale
I have suggested a fast escrow with him making the March payment, Splitting escrow fees and allowing me immediate free access to the prop for showing. He believes his wife will go along with this.
Does anyone have any suggestions as to how I should handle the existing lender? Should I have the deed recorded? Should I keep the escrow open after he signs off, and hope for a fast sale? What about the Insurance, can it be transfered to me? (new named insured)
Any input is welcome.
Thanks
JohnK(CA)


#3

Re: My 1st distressed property - Posted by David(Ca)

Posted by David(Ca) on February 28, 1999 at 10:38:32:

John,

Most poeple would tell you there is not enough equity for a deal here, I believe there is IF:

  1. All liens are current, this is rarely the case with a truly motivated seller.
  2. Owners will leave or really cooperate with showing, you might consider leasing back to them, NOT with an option to buy.
  3. If there is a NOD (Notice of Default) filed you must follow California Civil Code section 1695 regarding notice and 5 day recision.
  4. Property is in good condition.
  5. Since your estimate of FMV is so close to the loan value, recheck it and convince yourself it is solid.

I don’t think you should have any problem selling the place, the weather is great now in So Cal, and there are lot’s of buyers out there.

Good Luck.

Dave


#4

Re: My 1st distressed property - Posted by JohnK(CA)

Posted by JohnK(CA) on February 28, 1999 at 13:37:21:

Dave,
Thanks for the encouragement and input. This house is on the fringe area of the old stately section of town. You know the type,most larger towns have a section like this. The houses are all custom, about 45-60 years old. Nearly all have been redone. Huge lots, well manicured yards, grand old trees. Owned by doctors,lawyers, REIs and indian chiefs. Ha Ha. Sales within a three block area range from 130K to 285K, so it is difficult to figure a FMV
The loan is current on this property. My major concern is that I have to let him approach his wife with the deal. Sometimes in these situations one angry spouse will do anything to keep the other one from having a easy time, even if it hurts them as well.I hope to hear back from him today.
Thanks again
JohnK(CA)


#5

Re: My 1st distressed property - Posted by Jim IL

Posted by Jim IL on February 28, 1999 at 17:26:39:

John,
I recently dealt with a property that had many of the same things as yours does. I lost mine to another offer that went in the same day, but I learned from it.( a day late and $1k short, oops.)
Anyway, mine also had a FMV that was hard to figure. The recent sales in the area ranged from $100k to $200k, all homes with approx. the same square footage and layout, just different architectural designs.

I decided to not get an appraisal,(why spend money when I didn’t need to, besides appraisals are usually biased, in my opinion) but I did get permission to have the home “inspected” prior to making my offer.

Anyway, during these 3 days, I had 3 different RE agents do FREE market analysis, and this is what I used to help me determine the FMV coupled with the recent sales in the area.(maybe that extra time killed me, not sure, next time I’ll do this all in one day, at different times of the day).
All 3 Market analysis came back within 2k of each other. The gave me an as-is price of $110k. (I offered $90k and it went for $91k., again, I should have made my offer right away, and included the “weasel clauses” in the contract, in case my market analysis came back not in my favor.)
The part that killed me was the fact that this was a home that was owned by the 2 surviving heirs of a deceased man, and I was told it would take 2 days to get both parties to approve the offer. It only took them a few hours that same day to accept the other offer.
Perhaps you can try this approach. The agents in the area are usually pretty familiar with the market and can help you.
Good luck, and get an offer in quick. Also, make sure that you speak with both the husband and wife.
Make nice, and perhaps they will too.
And if it won’t go your way, move on. There are others out there, we all just have to find them.
Jim