Reaching out to a foreclosure prior to selling property
Hello,
My brother and I are looking for our first deal and noticed a foreclosure going for auction on 2/3/22. I was thinking of going to auction but was wondering if I could skip trace and try to make a deal before it goes to auction. Is this possible to do in such a short period of time? The owner is being sued for $32,000. It has a federal tax lien of $22,000. Prop stream shows a possible HELOC for 46,000 owed. They are currently still living on the property. The estimate between Zillow and Propstream are around $300,000-$312,000. If it goes to auction I believe the HELOC will not be paid as the other liens are prior to in priority(is this correct?). Is this a recommended tactic? I really want to be able to walk the property to understand the repair extents to be able to figure the max offer amount plus if I could talk the owner into renting it, they could stay in the house they are losing and I could make a nice investment. Thoughts.....
Yes, you can absolutely make a deal before it is auctioned off. It is actually a pretty common method. I would caution against renting to the current homeowner. Consider why the homeowner is in the position to lose the home in the first place and determine if given that reason, you are confidant you will receive your rent.
@Sean MIddleton
Never ever do a rent back to the current owner. You’re just setting yourself up to foreclose on them in the usually not too distant future
Well. I may have to door knock. The phone numbers found during skip trace were disconnected. Thank you for the input. I will not be renting to individuals being foreclosed upon. That makes great sense as they are already in financial turmoil.
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#1 Foreclosures Contributor
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@Sean MIddleton Just realize that they have no incentive to “give it away”. In most markets, foreclosure auctions yield 80-90% (or more) of current value. The current owner gets the surplus once all the liens are paid off, so they’re better off letting it go to foreclosure than sell to the typical low ball “foreclosure chaser”.
Originally posted by @Wayne Brooks:@Sean MIddleton Just realize that they have no incentive to “give it away”. In most markets, foreclosure auctions yield 80-90% (or more) of current value. The current owner gets the surplus once all the liens are paid off, so they’re better off letting it go to foreclosure than sell to the typical low ball “foreclosure chaser”.
Not to mention they will likely file BK the day before and take a stab at reorganizing their debt.