First Deal
I've got a lead on a house going into foreclosure next month. I'm looking to do a deal where I take care of the arrears, right now about 5 months worth of payments, and take over the current payments. I know that there is a deadline, I believe 2 days, before auction where the payments have to be caught up to avoid the home going to the steps.
How is it you get the money to the lender quickly enough to avoid the sale if you're closing only a couple days out from the auction?
The lady that has the house has it currently listed with a realtor, and the realtor is concerned about his commission, but I believe that I may be able to work out a deal with him.
Since this is my first deal, needless to say I'm a bit anxious and nervous, and would like to make sure that I dot all my i's and cross all my t's. I'm contacting my attorney now to check for a closing date next week, and I know how to take title of a deal like this by having the current owner transfer title to a land trust.
My only concern is closing so close to the sale date, and making sure the current lien holder is caught up and does not actually foreclose.
Can anyone make any suggestions as to what else I need to do to make sure this deal goes smoothly?
Thanks,
Scott
I'm not a pre-foreclosure guy, but maybe I can answer a few of the questions. To postpone the sale, have the seller call the bank and let them know that they have the funds to get caught up and needs to know you and where to send it. Overnight the payment if necessary, and have it sent certified. Sounds like you intend on purhcasing Sub-to or L/O. Either way, make sure that you have a firm grasp of the method. Don't want to screw it now.
As far as the realtor goes, Did you contact him or did the seller contact you? Has his listing term expired? If the seller contacted you and the agent's listing term has expired, then you owe him nothing. If you've spoken with him about the property, then he is entitled to a commission. However, agents usually split commissions between listing and selling agents, so if he is the only one, ask for him to reduce his fee by half. You may be able to get him to reduce it further by mentioning that if you don't buy, he probably won't be getting a commission at all. Also, if the seller loses the sell because the agent refuses to reduce his commission, then the seller may be able to sue the agent.
Roger
Make sure you get a reinstatement letter from the lender before sending off a payment. The lender may choose to accept the payment and still foreclose. With the reinstatement letter, you have proof that the lender will allow you to bring the mortgage current.
Also, is the seller planning on staying in the property? I would hope not because you may have problems with them leaving. What do you plan on doing with the property once you acquire it?
Tanya
Thanks for everyones input, however the deal fell through for a couple of reasons. One was that the lady that lives there now is very peculiar and would not let anyone into the house to look at it. Even though the house is only about 1 year old, I didn't feel comfortable going through a purchase site unseen.
The second being that after I looked over all of the financials I would've been doing good just to break even.
I appreciate all of the posts on the board, it made me sit down twice to recalculate the financials of this deal, I initially had not taken into account the payments on the property during my holding period when I'm cleaning it up to resale it.
Even though it fell through on the front end, I'll be chacking with the attorney the day after the sale to see if it goes REO. I do think that it'd be a pretty good deal picked up at the auction or in REO, just not in pre-foreclosure.
Scott