Buy Note Or Short Sale On This???
Here is the scenario:
A 2300 sf house with about 30K in repairs needed. Sale scheduled for 7-2-04. I know the house and the owners from work done there years ago.
I am wondering what my chances would be to try and get the note at a discount (currently 57K due @ 9%) vs. submitting a short sale? IF I get the note I can go through with the auction on the 2nd (but wouldn't need to if I get a quick claim from the owners)
I wonder if anyone has done this instead of the conventional SS in the past?
Would/could one submit both offers at the same time and see what developed?
Either way I have cash and could close in minutes. Hae been readying the SS but just wondered about the note buying.
Any experiences out there???
[addsig]
What is the as-is value of the house?
Brenda
You have not said much about the note, the value of the property and who the holder of the note is.
If the note was way underwater and the lender a private party you might find a willing seller. If the property shows a lot of equity above the note foreclosing, the holder of the note is a large corporate and there are no obvious concerns the note holder will likely just let it ride.
It seems a subject-to will not work and that the property is underwater but these are only guesses based on how you presented things.
John
[addsig]
I am well versed in valuation and ways to take the property. MY question is whether anyone has bought the note rather than going the SS route. The note is held by Residential money centers and being serviced by Chase. As stated above the note is for 9% and 57K. For those who love the details..... FMV is 85-95K (conservatively) it needs about 29K in repairs (unless like me you have your own construction company with plumber, electrician http://www.etc.Then it will be about 10K).
There is a second for 165K
It is due to be sold at auction for 57K sellers bid.
I wouldn't mind letting the trustee go through with the auction as it would wipe out the other lien etc and be simple if I were to substitute myself through purchase of the note and go ahead with the foreclosure.
Has anyone had any luck with this in the past? or do the banks always pool their bad paper and sell it?
Randall
_________________
"Chance favors the prepared mind..."[ Edited by Stockpro99 on Date 06/22/2004 ]
Hi, Randall
I don't have a complete answer on this and have wondered myself. I had a friend years ago who was successful at buying bad notes at a discount held by institutions. This was at least 20 years ago.
I have recently tried and have not been successful, even at face value. My purpose in buying the note was to pospone the sale until I could get financing lined up to buy the property.
My suspicions are that commercial note holders may be wary of possible legal consequences if they relinquish control of the borrower's note to an individual. I think that this is why they prefer short sales since the loan is then extinguished.
I would bet that a discussion with someone in a bank loss mit department would clarify this, but I have never pursued it.
Regards,
Ed
I am aware that there is the possibility of not getting the house at auction. HOwever; that would be ok if the bank (FAirbanks) discounted the note, I woud then make $$ without any real effort
Yes I think buying it at 57 K is thin, that is why I am seeking a discount and or short sale. IF there isn't at least 20K net in it I am not interested.
With the local scene it is doubtful whether anyone would want to invest what it needs in repairs to get top dollar anyway. As I am a contractor I can rehab at a discount. Were it not for the second Sub To might be an option. I have just always wondered about buying the note at a discount...
[addsig]
yes, buying the note at a discount is a good idea. But it may be difficult to actually pull off. Especially in the time available. As the sale date gets close the bank is less willing to discount because they figure they will have title soon anyway.
I'd contact the law firm working the foreclosure for the bank and make an offer to buy the note through them. $0.50 on the dollar is sorta normal opening bid to buy the note but under the circumstances you might want to offer more than that.