What do I need and how do I help?

14 Replies

NEWBIE ALERT! I finally have a real motivated seller and I know I'm not supposed to get emotionally attached but I really want to help or at least find someone who can.

The seller in the RE world is an absentee owner with a vacant property but is also a VET that was discharged a few years ago under one of the military's force shaping tools. She left her home in the hands of the agent that couldn't sell it as a pretty house. Now its a different story since the house has had to have squatters removed. She has no idea of the condition of the property. The house has basically been a nightmare for her. She wanted the problem to disappear so she thought she would just let it foreclose. For some reason it just hasn't and when I looked at the court documents there's not one pending. She knows that her note was sold but does not know exactly how much she owes. This is her homework before we can do anything.

Problem 1: The locks were changed by someone here a year ago because of the squatters and she doesn't have the key. She has given me permission to check it out but I'm not about to look like a burglar and she doesn't have the money to spend on changing the locks or getting a locksmith again. (Sounds like a cha ching from my wallet)

Problem 2: Paperwork. I need to know how much she owes and once I do I need to know what paperwork I need to talk to the bank or company that purchased the loan.

Problem 3: (The biggest) ARV of the house will go for 165k (conservatively). She said she think she owes about 140k. (Yes I know, there goes the chances of a great flip profit). And, she has no idea what the squatters did to the place.

My question: Will a contract and power of attorney suffice for me to make moves and get more information about this property and loan? How do I even word the contract to try to get a short sale, or should I try to buy, fix and hold for a renter? (Rent rate is $1100)

Notice RUN is not an option. Emotional attachment comes from the fact that I am in the Navy and went through the same PTS approval stress two years ago. Fortunately for me I was able to advance and my life didn't fall apart as hers have. So if you have solutions (as we all say we have) offer whatever advice you have please. This one is a mess.

-Tiffany

P.s. Sorry this is so long.

Well, if you have intentions of buying, I suggest you stay far away from any power of attorney as that opens you to unnecessary liability. You simply need an authorization to release mortgage information, often any bank will give you a form needed to obtain information or this can be done with a letter. I also suggest you get a written authorization to enter the property to inspect it, under the circumstances this letter should be notarized so that any cop won't have as many questions.

It could be a flip with cleaning and lipstick, but not likely at what you think market is or what it was listed for because it didn't sell, obviously it was not priced to sell.

You can't know until you see it and verify the mortgage payoff. Good luck :)

Medium logoscopiccroppedblue2Bill Gulley, General Real Estate Academy | https://generalrealestateacademy.com

Is the house on the MLS currently?

If the numbers don't work with the loan pay-off amount, they might work with lender agreeing to a short sale.

Thanks Bill and Jesse. It's not currently listed and from the pics I saw from years ago, they hadn't renovated the kitchen. 

It sounds like the owner needs to get to the property, get new locks, get it listed with a realtor. Contact the loan company and get it sold. Short sale if necessary.

The owner needs to take care of it.

If you want a deal, wait until it gets foreclosed on and buy it for less than $100.

The bank had their preservation co. change the locks when they found it was vacant, after it went into default.  Find an experienced short sale agent.  The bank will require it to be listed before looking at a contract.  No value in you getting the ATR to talk to the bank, the agent will do that.  There's no deal here for you, unless you want to buy ot for what the bank approves, and if want to help her find an agent to short sell it.

The bank should not have changed all the locks during the pre foreclosure period. Since it has not been foreclosed on someone did something wrong. Might have been one of the banks that has been in trouble for doing so, or the preservation company. During pre foreclosure the owner has the right to enter and that right has been taken away by some means other than normal legal method from the way it sounds. That you will not know with out further due diligence.

If you want to just help her the first thing is to find out who holds the mortgage. If papers have not been served then she needs to talk to them. County records should show the lien holder. Once you find out who the bank is and if you have the funds to purchase, you could consider making an offer to them to take the property off their hands. You could always make a low ball offer to see if they just want or need to dump it. Some are even open to a sort of partner fix and flip. Or pay you to help them get it ready for sale. Providing you are set up with insurance and any other requirements in that county.

You might have a tremendous amount of damage since the property has sit for so many years and the fact the squatters don't care what they do to survive in there.

There are many note buyers that might have already purchased for a future profit and just sitting until they have that one in their que to start moving on it. Some of them hold thousands of properties across the states. They still will have to serve papers and go through the formal foreclosure for the state the property is in. 

Hello everyone. @ Arlan and Wayne of course I didn't want to hear I will have to go through a realtor to have a short sale approved because it defeats the purpose of trying to help the homeowner. The reality of the situation is that I believe that is exactly what happens here in my county. I noticed a house that I prospected a month ago on the market for all of a week. Now the status has changed to a Foreclosure. What are the odds that the banks will take a lower offer especially under $100k?

@Bill Gulley  - Thanks for the info, energy, and positive vibes. I do believe someone changed the locks because of the squatters because there are still soda cans and beer bottles in the window sill (yikes). How do I lock up the contract with the seller without locking in a price and trying to get a short sale? I thought about a lease option but I still don't know how much she officially owes, how much work the house needs, and I know I could get a better mortgage payment than what she pays. Subject to- same as above.

My plan (feel free to jump in and call me a moron at any time) lock up the house under contract subject to the further inspection of the property and purchase price subject to bank approval of short sale (is there some specific verbiage needed here?). Use the Authorization to Enter Property to get in via locksmith and check it out with a contractor. Talk to the bank to see if a short sale is a possibility and talk to the foreclosure realtor to see what the process is here for obtaining a pre-foreclosure that has not been listed.

What do you think?

I would first do the due diligence with the county recorder or the department in your county that keeps the records on the property. Some counties have a link to all the records. The other thing is to search "short sale" here on BP. There will be a lot of posts you can look through and learn about short sales. First is to confirm it is still in her name with the lien holder at this time.

Run the numbers back words. If ARV is $165k then I would be realistic and reduce that first by 10%. $148,500 to $150k. Listing around this amount after rehab, will help sell the property quickly. Then 65% of that is the most you should have in the project. A lot of contractors can give a decent ball park rehab figure for you to be able to run the numbers. Just reduce the offer by that. So if the rehab would be around $20k then try an offer at $76k. Never know until you try.

@Terri Lewis  

Thanks Terri. I'm definitely going to try. Do you have any special tips on what to put on the contract with the seller and how to approach the bank?

Be careful with those numbers, 25k is not alot of profit with all the work that needs to be done. Personally I would want a whole not more margin than that.

Of course Elizabeth. I'm going to try to get the short sale. I seriously doubt the house would even appraise at 140k in its current condition. Its a nice house on the outside, but after peeking through the window it definitely needs some work.  Do you think my reply to Terri two comments above is a good plan or would it just waste money?

Sorry for the delay in the reply. Do some research first on property, and the bank. Make sure you can get the one holding the lien. Find out if the have a department that handles the pre foreclosures. I have called banks and talked to the person assigned to handle the property. They can generally get you to the right person or can help you get an offer to the right department. Make an offer that will work for you to be in the 60 to 65% ARV range. Either they accept it, or just move on and find another property that will make sense. Also @Bill Gulley   might have some knowledge as to what the possibilities would be for you to make an offer that might be considerably lower than the balance of the note. I believe you will need to be able to make a cash offer. I will keep my fingers crossed for you.

So far, there is nothing to advise on really. Not knowing the payoff means not knowing what a price might be of if it would be a short sale.

Saying it needs more than lipstick does give us a cost of rehab.

Not knowing comps, the details of the area I can't guess at an ARV.

Under the borrower's Deed of Trust, abandonment, the lender has every right to secure the property and protect their collateral, which it sounds like what they did.

If it won't appraise for the payoff, you do need to get with a short sale Realtor with experience.

Not knowing your abilities of rehabbing (I'm guessing you'll get a GC) I can't suggest anything specifically, but you might look at improvements on a grander scale if there are say, $200/225K comps, taking the property beyond the $165K you're thinking it would be in it's reconditioned state as the original house. Not knowing you financial position and ability to borrow, we can't go  there.

I have no other thoughts until we get the real numbers. Good luck :)   

Medium logoscopiccroppedblue2Bill Gulley, General Real Estate Academy | https://generalrealestateacademy.com

I would not touch that deal, there is not enough to pay for the hassle, 15K is not enough. Keep on looking you will find them.

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