Need Help With First Pre-foreclosure Deal....
I have a seller in foreclosure with a 1st mortgage of $147k and a 2nd of $58k.
He said he didn't know (or was embarassed to admit) how many payments behind he was on the foreclosing 1st. However, he did acknowledge the bank wanted 44k in back payments and taxes.
On the 2nd, he said he tried to short sell and they'll take 5k, but the 1st is not biting on doing a short sell with him.
The house has comps of $225k and up. My thoughts were for me to short sell the deal, but the house will be auctioned in 1 week.
I haven't seen the house yet because I just got te call today, so I don't know what the repair estimates are. Need Help!!!
The 1st probably wont short because of the equity in the property. Short the 2nd, or buy their lien, and pay off the 147 on the 1st. Then youll get the property for 152, thats worth 225. YOu have to do the short sale and be ready to close in a week or get teh foreclosure postponed. either that or you possibly could make 1 month payment and postpone it a month.
Tim[ Edited by bgn2fsh on Date 07/15/2003 ]
I thought if the first was being foreclosed and you get it, you do not have to worry about the junior loans. Is this incorrect?
From what you have said, as to the true equity. I would contact the lst TD now in foreclosure and see if you can bring him up to date. (cuts down the capital exposed) If yes, then buy the second TDand start your foreclosure from it. So if some smart ass overbids you at sale you make a nice profit on the outstanding balance due you as new owner of the second. I would if the above is working, ask the Seller for imediate possession and start to work right away.
Out of curiosity. What are you giving the Seller? Free rent? a meal. traveling money. what. Get it set. Do not take deed you will mell the second if you do. \
Good luck watch your step. Lucius
You don't have to worry about the junior loan if you wait for the auction and are the person who makes the highest bid.
You run the risk of the price escalating past the price of what is owed on the first, and maybe even the junior loans.
Before the last two posts I thought I was completely understanding.
Buy 2nd at a discount. Pay off the 1st, even if they wont discount. But to me NONE OF THIS WAS WORTH IT WITHOUT THE DEED. Because you became the bank and now need to foreclose.
Are you saying that the foreclosure sale will still happen even though the bank that initiated it has been paid?
are you saying to go to the auction and outbid the bank by $1 and up to $5000 because you bought the 2nd Mtg for that much anyway? Fine, I think I got that.
But did you say that "we DONT WANT THE DEED?" What does "Melling the 2nd Mtg." mean?
thanks in advance, this is all great stuff.
N.
After several conversations with the seller about his options an getting to a point to where I could make an offer on the house, he says he wants 20k-25k out of the deal. While there's significant equity in the house well above the 1st and a shorted 2nd, which he knows, I don't think it is in my best interest to give him 20k-25k. However, I am open to a much lesser amount. Should I take this approach or should I walk away from the deal. Keeping in mind the seller wants to sell, but he wants a small piece of the equity he knows he's going to lose.
I would think a friendly remoinder of exactly what this seller will get if this house goes to foreclosure. $0.00 and some wonderfully poor credit. Seems like you should have a good bit of negotiating power. Offer him what you feel is fair.
Thanks to everyone. Your comments/advice has been extremely helpful.
Hey what state are u in???
SKI
Chicago, IL ....