Preforeclosure..My first one. Just checking - Posted by Ben (FL)

Posted by Ben in Ohio on April 14, 2000 at 12:29:28:

'taint gonna happen. If the owner gives you the deed, then something is amiss. DO your due dilligence.

Preforeclosure…My first one. Just checking - Posted by Ben (FL)

Posted by Ben (FL) on April 14, 2000 at 10:47:02:

I got a hot tip about a 3-unit rental that was going into foreclosure. It needs about $10k in work, FMV = $120k. I have a copy of the “Agreed Summary Final Judgment in Foreclosure” through a friend who used to live there and is still owed a deposit. The total amount of the foreclosure is about $35,000.

My plan is to call the owner, see if he wants to sign the deed over to me so I can take title “subject to” and avoid foreclosure, then get his permission to talk to the lender about the property. If they go along with bringing it current and taking title…I win, right? I would think, since the property is worth much more than the settlement amount, might the bank want to foreclose and make some money, themselves?

Sale date on the courthouse steps is May 10. Any help, comments, or advice is appreciated. Also, my friend says when he talked to the owner he seemed “cranky.” Any tips on how to approach a potentially hostile and vindictive older proeprty owner would be a great help.

Re: Preforeclosure…My first one. Just checking - Posted by Ed Copp (OH)

Posted by Ed Copp (OH) on April 14, 2000 at 18:42:03:

If yo get confused read the post by Brandi, again. The seller may be a bit cranky, I know I would be. I don’t know about sheriff sales where you are, but here in Ohio it is not unusual at all for a property to sell for 10-20% over the appraised value. I am sure that this owner knows that after the sale he will get a check for whatever is left from the sale, minus of course the payoff to the lender and the sale expenses (unless he just decides to give that money to you). He may not care about credit ratings etc. he may just want the cash in hand. You might want to be reasonable here and make him a realistic offer. How about taking over his loan and giving him a note for $50,000 Payable over a 15 year period, something that he could at least think about…ED

An 85k GIFT?? - Posted by Brandi_TX

Posted by Brandi_TX on April 14, 2000 at 15:32:23:

Valued at 120k and only owes 35k?? Is this the only lien on the property? If so, this guy has options to get himself out of foreclosure. Why he hasn’t explored those options is beyond me. That will be your job - to get “the story”. Be prepared to hear no when you ask for an 85k gift.

Unfortunately, some people would rather let it go back to the bank then let another investor just have all that equity. But don’t let it end there. Once you find out what this guy needs, come up with an alternate plan that will work for you both. (How about letting him stay as a co-benficiary with no rights to encumber or manage the property?)

Good Luck,

PS - Jim is right… lock this thing up, THEN do your due dilligence. Assuming you lock it up correctly, getting out if something is “amiss” shouldn’t be a problem.

Re: Preforeclosure…My first one. Just checking - Posted by Jim IL

Posted by Jim IL on April 14, 2000 at 12:41:22:

Get the deed, and then finish the due diligence.
Make sure the seller knows that if something is amiss, then the deal is off.
This way you are in a position to talk to the lender and get things straightened out.
One scenario is that you get the deed, and the lender will not let you reinstate.
Then, you can just get a hard money loan for the payoff, and the repairs.
You said it is worth $120k, make sure of that number.
Then, if you get in for the $35k, plus the repairs, you are still in low enough to get hard money.
Just make sure to do all this quickly and thoroughly, since that auction date is looming.

Just my $.02,
Jim IL