Pre-foreclosure In BAD Financial Shape - HELP!
I'm not sure if this is the right forum for this post... but I couldn't figure out where this fit best.
here's my situation:
I am brand new to REI, specifcally to Flipping pre-foreclosure and rehab properties. I found a property that is in good condition, and the homeowner wants out of it b/c it is headed toward foreclosure. He couldn't give me much financial info up front except that he hadn't made a payment in a very long time, and that the house was originally scheduled for forclosure in Feb. 03, but that was cancelled on the day of sale.
I got a contract signed to purchase the home for what is owed, then got the reinstatement quote and payoff info from the bank (after calling them over 10 times!). I also got a short sale package from the bank....
The bank gave me a reinstatement quote of 27K, and the payoff information says that there is a princ. balance of 55K and interest of 20K owed, for a total of over 80K for payoff!!! Based on comps and research, I could MAYBE get 55K retail for the house.
My question is: WHAT, if anything, can I do with a home that is maybe worth 55K, but the bank is owed over 100K for it?!?!
what are my options at this point, other than using my 'out' clause on the contract?
thanks! I'm open to all help... post here or send me an e-mail through my profile here
-ejs
From first glance and a few assumptions, this property has negative equity. You have found a future buyer which you may be able to work with to find another home. Unless we have missed something here, move on and find another deal.
Eric & Rosa
[addsig]
I would try to go for the short sale, letting the bank know the property is only worth 55k fixed up,I would let them know you are an investor and need to make some kind of profit, also I would go through the house with a fine tooth comb, I'm sure you could find some problems and let the bank know that you will have to fix these things before you can market it. The bank would have to do the same thing to sell it, it dosen't sound like they will have much of a chance of selling it at auction.
Good Luck
They will definitely want their principle more than they will want their interest and fees they have charged...Try to negotiate based on what they actually have spent out of pocket, and then try to waive the rest of the fees...
short sale..you have their package...complete it, make a cash offer of 25k...
Agree, offer them 1/2 of principle, forget the interest and back payments, if they go for it- good, if not no loss to you
good dealing
Don
Thanks for the replies everyone... I will be completing the short sale package and making an offer of 25-28K. Worst case: they reject the offer and I just got my first experience of making a short sale offer on a loan!
oh one more thing: one of the many people I talked to at the mort. company told me that I cannot make a short sale offer and turn in the package until there is an offer on the home. is this true? is this sometimes true? I had never heard of that before...
thanks!
ejs
edjspi
I;m curious, Did that short sale ever work out for you or not?
tjm528,
unbelievably, I'm STILL working on this! I had to get a lot of info from the homeowner, and another thing the mort. co requires as a part of the short sale package is a preliminary HUD statement. so I had to find a title co. that would do this for me. I found one, but they require q title search before they can do that. and they aren't that familiar with doing short sales, so it is taking them a little while. last I heard they were still waiting on the title search to go through...
so, basically it is taking a VERY long time to get all the correct things together that the mort. co requires for a short sale offer. I normally wouldn't go through all of this for a deal with so little potential profit, but I am just starting out and if there is ANYTHING I can do for this person, it will only benefit me! they have already referred me to another seller, and I haven't even completed this yet!
lotsa persistance required on this deal...
I will keep you posted!
edjspi