Newbie Needs Help Fast Auction In 2 Weeks!
I am new to real estate investing and I want to purchase my first investment for my own home. This property is a 6BD 3BA in need of cosmetic repAIRS. It has been empty for a year or so but is only about ten years old. The owner facing foreclosure owes only about 105K. My realtor friend viewed the home with me and gives a FMV of 160k. INSTANT EQUITY! Good, right? The problem is-- the auction is scheduled for June 11th and my home that is on the market with a realtor has not sold yet which means I have no cash. Should I try a short sale this late in the process- ( I only learned about this technique last week), or wait for it to go REO? Contact the loss mitgation dept.? I have bought two books recently- "Making Big Money in Foreclosures w/o Cash or Credit" and "The Beginners Guide to Real Estate Investing" I am intelligent but I am experiencing information overload. I am pressed for time but I want to find out how to make this home mine if at all possible. Thanks for your quick answers!
Betsy 
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What I would recommend doing is purchasing the property subject to the existing mortgage. Catch up the back payments and reinstate the mortgage. There is plenty of equity to be made here.
First, do your own legwork and verify the FMV. Get your friend to give you the list of comparibles and go look at them yourself. Eliminate those that don't compare with the home you're buying (many realtors are taught to comp by averaging everything that's sold in the area). How many 6/3's with a similar size, style, and lot size have sold in the last 6 months in a sufficiently close radius to support the FMV?
Second, talk to a lender to see if you could buy the property for less than FMV with an owner-occupied loan and refinance some of that equity to make payments with while you sell your current home.
Check the title (if the owner seems agreeable to a sale) to make sure 105K is all that's owed on the home. You might find more against the title than you are bargaining for. Inspect the home as well because it's current condition may not even warrant the 105K that's owed (in this case a short sale would be a great idea, but you probably don't have enough time to get it done...especially since you haven't done one before). But it sounds like you're buying a home instead of an investment since you plan to live in it.
Also, there's no guarantee that it will go REO. If someone successfully bids at the auction, they will take title and the bank will get their money...and that will be the end of it.
I'm sure you'll get some excellant advice from others here, too. Good luck and keep us posted.
He still can't do this without the owner being involved. As it is now, the owner can sit back and wait for the sale and see if there is any overbid money. So, what would you suggest the OP does to encourage the owner to allow him to reinstate with the bank?
Quote:
On 2004-05-30 14:13, myfrogger wrote:
What I would recommend doing is purchasing the property subject to the existing mortgage. Catch up the back payments and reinstate the mortgage. There is plenty of equity to be made here.