Hello BP family,
I am looking to make an offer on a home that is currently having issues paying the mortgage. I believe this is called the pre-foreclosure phase and I want to know if any of you have experience with this type of home purchase?
How could I find out how much is owed on the home and what their current mortgage is? I would use this information to factor in what a reasonable short-sale price would be for the property. I understand they could possibly say "no," but nothing ventured, nothing gained.
I suppose that you could make some guesses as to what is currently owed by looking at the date and amount of the last mortgage that was placed on the property, however your best source of information about mortgage value would be this homeowner.
I think the first thing that you want to establish here is whether the homeowner is looking to sell. Just because he’s behind on the mortgage doesn’t mean he wants to sell the house.
If the homeowner is actually interested in selling to you then he would probably supply you with the information that you’re looking for.
Most mortgage have little affect on principle in the first 10 yrs, so compare that to the estimated current value. If its a short sale, then the actual mortgage amount is irrelevant because it will only sell for todays market value.
I wouldn't recommend you doing anything on your own. Speak with agent or someone experienced in that area to look that house with you.
An important distinction. Pre-foreclosure doesn't necessarily mean they are short. It just means they have been in default. There could still be substantial equity. Short sale means the seller would be in the red if they were to sell the home.
If this is a short sale, I would recommend working with a broker who is experienced with short sales to handle this. When the bank determines the short sale amount they will accept, they already set aside a budget for paying real estate commissions.
First i'd be checking if they would entertain selling or if they are seeking other solutions to feel out the situation. If it's a short sale, an agent would be required to represent the seller per almost all investor guidelines on the note. If the home is in foreclosure and if it's an auction date, then you can look at the published bid. Best way is to get a payoff on the account which i typically do during the research and consultation stage with the client.