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negotiating a pre foreclosure short sale 
4 posts by 4 users
Dan C.Contractor Upstate, South Carolina |
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I have been looking at a certain property for my pri. residence. It has been on the market almost a year and the price just keeps dropping lower. It was listed through an agent so we put it under contract and were set to close last week. Three days before closing the agent calls to tell me "oops" the prop is going to foreclosure sale Mon. morning. I told him to call the bank and hold off the auction. There is additional fees around $11,000 on top of what the outstanding mtg is. The sale was postponed but he is trying to neg. a short sale. Would it be possible for me to neg. with the bank even though the property is still listed through this agent? I know short sales are always a crap shoot, but I'm not trying to steal the property. I just want the best price and I don't want to finance someone's bad debt. My only other option is to wait till Dec. for the next sale. I have no experience at auctions. If anyone can advise me I would appreciate it much. |
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Dave P.Real Estate Consultant |
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Dan, It would be possible to negotiate with the bank without an agent, but you will need written permission (and cooperation) from the seller to do so. If the agent knows what they are doing, they should be able to get it done for you though. |
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NickGForeclosure Specialist Reno, Nevada |
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Dan, have you ever heard of filing a UCC-1 Lien? If you can get the sellers cooperation, have them quit-claim you the property under contract that you will buy it at a certain price. Then file a UCC-1 Lien on the property for more than the foreclosing amount. This puts the bank in 2nd position on the deed because a UCC-1 lein is a federal level lein (like a tax lein). You then can renegotiate terms with bank, make a settlement offer and then "refinance" the property to pay-off the bank and put more money in the sellers hands than if they had not done this. Let me know if you have any further questions. |
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J M.Real Estate Investor South Carolina |
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Dan, it sounds like you already know what the bank's bid is going to be and that's more than you're willing to pay. Pursue the short sale, but don't count on it going through. Plan on going to the auction since sometimes the bank will bid less than they're owed in an effort to avoid getting the property back (one drawback to trying to do a short sale is the possibility that the bank may be less likely to lower their bid if they know they have an interested party). Call the county office that handles the sale (often called Master-in-Equity in SC) and ask them to explain the sale process and where you can go to view the file. Read the notice of sale in the newspaper or file. If possible, be prepared to bid on the property if the price is agreeable. You will normally need a 5% deposit on the day of sale. If you need to finance the property, it IS possible to get a loan by the time the balance is due, but work this out with your mort broker / lender ahead of time since you could lose the house and your deposit if they can't get the loan done by the time you have to pay off your bid. Assuming the bank get's the property back, submit your offer to their REO dept. Unless there's a lot of equity, the bank will likely take an offer for the outstanding loan balance minus the fees and penalties -- perhaps lower depending on the relationship of that balance to FMV. |
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Posted: 11/08/2008 at 02:57AM
