Pre-Foreclosure Unopened Succession.....
Being new to REI, I'm not sure what to do with the following scenario, but I think I smell a deal! Advice, guidance and even "hand-holding" are welcomed!
Yesterday I located a property in pre-foreclosure, scheduled to be auctioned mid-March. The foreclosure notice is the mortgage company vs. "the unopened succession of".....
The owner apparently died in June 2012, and the house appears to be vacant.
The writ amount is $98,500. (What is the best method for finding/determining accurate comps?)
Indications are that the brick house was built in 1994 and is approx. 1250 sf. From the outside, it appears to have been kept up; someone has at least been taking care of the yard. It is in a good neighborhood and, having to guess based on outward appearances, I would assume that very little would need to be done inside to make it move in ready. Again, I would conservatively estimate that this house would retail for $150K.
Upon "googling" the deceased's name last night, within two minutes I was able to find the names of four children and eight grandchildren. Additionally, with little effort, I found telephone numbers for one child and one grandchild. These were the first and only two that I attempted to find. (I figured I could search for others if needed.)
I am assuming that the next step would be to contact these relatives and pursue a deal. I have no problems doing so, BUT moving forward would potentially make this my first deal! Because of my complete lack of experience, I am asking the seasoned veterans here at Bigger Pockets! What should I do next? What type of deal would be the best strategy? What would YOU do? I am here to work, learn and earn!
Your input and assistance is greatly anticipated and even more appreciated!
I have also posted this in the General Foreclosure & Pre-foreclosure Forum
Most likely you would need to buy the property from the estate of the deceased. From your description it sounds like an estate was not opened. You would have to contact an heir that was willing to open an estate.
@Ned Carey Ditto.
Thanks guys for your replies @Ned Carey and @Rick H. ! Since creating this post, I've discovered that there are four siblings... one is willing to move forward with opening succession (estate/probate), but the other three have chosen not to do so - they are fearful of being stuck with unknown "debt". I've also learned that there are options for allowing the "one" sibling to move forward, but it will still require some degree of cooperation from the other three. I hope to speak with each of them and try to get them on the same page (sometimes I manage to be persuasive).
I've done some due diligence work today and discovered that there are no liens, etc. on the home, and that what they may have perceived as potential debt responsibilities is incorrect.
If I can get them to "open succession" and subsequently get the house under contract, I think the deal may work out something like this:
- $165000 ARV (Conservative estimate, waiting on comp info - tomorrow?)
- $118000 Purchase price (includes interest, Sherriff's fees, etc. to date)
- $17000 Rehab (high estimate)
- $5500 Fixed Costs (high estimate for cash buyer?)
- $24500 Profit
I'm not quiet sure how to structure deals, etc (I'm new to this), but.... what do you think?
I would love to find someone locally who would be willing to partner up on this; let me do all of the leg work and learn as I earn!!
Every pre-foreclosure deal I have ever come across has had $20k-$30k in late payments, fees, fines, etc tacked on to it.
I wouldn't assume anything until you get the actual payoff.
Just my experience.
Have them affirmatively assign their interest(s) to either you, the cooperative heir or have them release any claims to same.
Louisiana has some strange laws concerning scriveners do check with title company that will insure your exit plan.
Thanks you @John Horner for your feedback. I actually came up with that figure after doing some due diligence work today to see if there were any liens on the property. I discovered the following:
- $98500 Mortgage balance
- $11010 Interest due (3.725% per annum going back to 5/10/12, per suit)
- $2750 Sheriff's departments cost/fees
- $950 Attorney's fees
- $113210 Total
That leave a "fudge factor" of $4700, if I've done things correctly. I try to "leave no stone unturned."
What do you think? I really appreciate feedback and constructive criticism!
@Rick H. , I've done some research and determined that here in Louisiana, the "three" siblings can do a "donative renunciation" of their inheritances, donating to the "one" sibling. (For that matter, they could all "donate" it to me!!) Hopefully I can talk them into it moving forward one way or another.
If they let it go to auction, I'm sure it won't be worth pursuing... the bid will probably get run up by the mortgage company. In addition, there are others here that have been "begging" for that house.
I've also got an Attorney/Title Company (investor friendly) on board, ready to move forward with the succession (probate) when we get a green light.
I need to begin a serious search for a buyer. I basically want to wholesale it, unless someone wants to partner up and let me see it through the rehab as well.
@John C. I just sent you a PM for a local contact who may be able to help you.
Thank you @Robert Leonard ! I appreciate it! I've checked my inbox... nothing yet. Guess it takes a bit.
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