Profit in Foreclosures!!! - Posted by WadeFL
Posted by WadeFL on March 14, 1999 at 20:23:56:
FYI to interested parties:
My name is Wade of Fort Lauderdale, FL. After three months of studying Creonline I got my first contract on a beautiful property in Miami facing foreclosure auction at the end of March.
This is how it goes. I studied Jackie Langes Primers on Flipping and STARTED POUNDING THE PAVEMENT!!! I mail a really good letter to homeowners who are in foreclosure with an offer to buy their property OR if the numbers are high (low equity), I can get a hard equity loan to help them reinstate the mortgage.
Got a call from a nice lady from Brazil whose house was in foreclosure. Property was appraised for $98,100 in the Doral area of Miami (mega ritzy) and the units are selling for $130,000 to $150,000 based on the comps. There was a JUDGMENT on the property posted in 11/96 and the sale date of the judgment was 2/4/99. The other lien on the property was a mortgage which was scheduled for foreclosure on 3/24/99. The payoff balance on the mortgage was $62,000.
The owners are foreign nationals and based on my mortgage broker experience, I knew that they must have put down at least $30k when they bought the house when it was built in 1994 for $106,000.
The owners happen to be in Brazil and the son in law was working really hard to try and resolve the foreclosure issue for them. I did the numbers and rushed a contract to him to buy the 3 bedroom 3 bath condo for $83,550 and a few powerful weasel clauses. My offer was 65% of average resale price and 85% of assessed value of $98,100.
I figured that I could assign or flip my contract to an investor “cash buyer” and make $5000 to $10000. My contract was solid. GO WADE, GO WADE. MAKE IT HAPPEN. LIVE YOUR DREAMS!!!
TRUTH REVEALS ITSELF: The owner bought the property in 1996 and a few months after buying the property, the trouble started. Doral filed a judgment against the homeowner for $6697. Then in October of 1998, the homeowner is served a default notice with a pending foreclosure auction date of 3/24/99. There is a judgement sale on 2/4/99. This property
is governed under a homeowners association (Doral Joint Venture).
One of the forms that the homeowner signed, Consumer Authorization Form, allows me to contact creditors and attorneys involved with the foreclosure. GET READY…THIS PART IS GOOD! A company by the name of First Financial bought the judgement in February. This company bought the mortgage. And title is transferred to First Financial. No foreclosure on the mortgage is held.
I have yet to read the foreclosure statues for Florida. It seems like the company bought the judgment and accelerated the process by foreclosing or exercising some homeowners association rule which allowed them to receive title to the property.
Now, there was minimal disappointment for me regarding the contract being null and void for obvious reasons…the Seller doesnt own the property and the provision of marketable title being flawed.
I was now faced with the precarious position of having to advise the previous homeowners that they no longer own the property and the reason they have been served an eviction notice PRIOR to the foreclosure auction is because title was transferred by means of a judgment sale or a homeowners association rule on the contract addendum that is usually attached to the standard r.e contract.
This was my second foreclosure deal. My first was a D paper mortgage that I made $2000 on in July of 1998. The loan was only $63,000 and the interest rate was 12.25%. The owners was smiling at closing. I saved their house (they couldnt believe it…WADE SAVED THE DAY). The great part is that in July 1999 I can refinance them AGAIN and make another $2000.
Foreclosures are exciting stuff. Payday can be a years wages! But this stuff is no trip in the park. You have to know the foreclosure statues and the process from start to finish.
Coincindentally, I received Joe Keisers course Totally Dominate the Foreclosure Marketplace on the day I got my contract. Within 24 hours, I knew how things should really be done in the foreclosure business. Get there first and deal exclusively in the pre-foreclosure marketplace where there are FEW sharks and mega-profits.
Now, lets look at the above case with what I now know. If I had pulled the index of court documents and found the judgement in 1996…I could have bought the judgment and negotiate a payoff/release with the owners. OR do like First Financial did. Buy the judgement and legally receive title to the property PRIOR to the auction. They probably received title to this property for under $70000. That is 50 cents on the dollar ladies and gentlemen!
The name of the game is to get there first. Hope my experience helps some of you out there who are thinking about foreclosures.
Fort Lauderdale, FL
PMA: Live with passion! Go for it!