Hey everyone! Still a newbie and would love some input. I might be totally off base for even exploring this option, so would love some input.
Looking at a SFH in my township in New Jersey. Property was last sold in 2001 for $161k. Currently assessed value is $240k. Has been in pre-foreclosure for 1.5 yr. Looks like the amount owed on the property is over $700k. How is this a thing? Did the owners take out a second lien on the property? Is it even possible to pursue a short sale on this property or am I grasping at straws?
Not sure if it is owner occupied - I've seen an out of state license plate parked in the driveway and the mailing address is a PO box in a nearby town.
The amount of the loans owed has no bearing on whether a short sale will be approved or not. The only value that matters is what its worth today. The 700k owed is not shocking, probably some refies or loan mods were involved. However - to buy the home you would have to locate the owner and they would have to agree to sell to you in order to move forward at all.
@Minna Reid Perfect, that's good to know. Thank you so much for taking the time to answer and for your knowledge!
@Natalie C. - Where did you see it's been in preforeclosure? Remember the A in Zillow stands for accuracy. In many towns in NJ, you can view sheriff sale information online on the county website. This will tell you what properties are due to come up for auction. When I went to sheriff sales in person, about half the properties would be delayed until the next sale (or later), a quarter would have upset prices so high the bank would take the property back and sell it as REO, and the other quarter, the bank or owner would have a low upset price and investors would bid against each other in a live auctioneer format. When you buy an REO, most if not all of the title problems (liens, etc.) have been handled by the professionals and you will get a fully marketable title. If you buy at a sheriff sale or anytime without title insurance, you may not be buying a property with marketable title.
The tax assessors website will share the owner’s name and mailing address. Most agents can also pull this for you. There are other websites like listsource where you can buy lists to target non owner occupied homes, probate properties or long-time owner homes in order to buy a deal. Because inventory is so low right now, going direct to seller may be your smartest move.
@Natalie C. That is not uncommon, my parent's unfortunately had to have a short sale a few years back and they didn't pay for over a decade. The house was so under water you can buy it 3x over lol. Regardless, I would get in contact with the owner and ask if they are looking to sell. The pandemic unfortunately has given sellers in preforeclosure little to no motivation for the most part. But good luck and you definitely want a good short sale guy to handle it if it is your first one. Just remember, legally speaking, it will need to be listed a certain amount of days and all other offers must be presented to the agent and the seller. Now, the owner typically decides what is the best offer but remember that.
Btw “assessed” value is not market value and can be many times less than the home is worth on the market. So i would be pulling comps to find what the homes market price really is.