Purchase from Bank prior to foreclosure auction in PA?

13 Replies

Has anyone successfully purchased a home that is scheduled to go to foreclosure auction from the bank prior to the auction?  I recently came across a property that I am interested in but it has another 2 months before the auction.  

@Ryan Duchak : I tried a few years ago and it was tough to even speak with someone that was a decision maker.  I was trying with a big bank... perhaps a smaller bank or financial institution may be different.  I found out who the law firm was and could not get through to someone.

@Anthony McEvoy : Thank you for the info. Unfortunately I think I am going to be in the same situation. Very big bank on it and I think it could even be from a portfolio of loans the bank purchased.  Seeing that one hand usually doesnt know what the other is doing I am not sure how to approach the bank other than the law firm. 

@Ryan Duchak : The amount of time you put in to get somewhere you could find another deal I'm sure. Look on the bright side... if it does go to auction in 2 months then you are into the holidays and potentially less competition. If your plan is to get rid of it... then the spring is right around the corner.

@Ryan Duchak Does the property have equity? If so, you should be able to get the property in contract, open escrow, get a payoff from the lender, and and close the transaction as long as you can do it before the sale.

If it's underwater, you can still try to buy it but the seller is the one that needs to take the initiative to try to do a short sale with the lender.

@Andy Mirza I believe there is equity in the property.  However, notice of seizure and execution was published in November of 17.  My understand is that the bank has already taken ownership, so we would need the bank to agree to a sale prior to the auction.  Hopefully I am wrong about that!

Originally posted by @Ryan Duchak :

@Andy Mirza I believe there is equity in the property.  However, notice of seizure and execution was published in November of 17.  My understand is that the bank has already taken ownership, so we would need the bank to agree to a sale prior to the auction.  Hopefully I am wrong about that!

 I’m not familiar with the laws in PA so I can only speak in general terms. Whether you’re in a judicial or non judicial state, there’s a point where ownership of the property changes. Typically, it’s the trustee sale or sheriffs sale or confirmation of sale hearing. Prior to that point, the borrower is the legal owner and can sell the property. After one of the above mentioned events, the title transfers to the foreclosing entity (bank) and they are in control of the property.

It would be interesting to know how PA is different…

@Ryan Duchak Its an uphill battle. There are some good suggestions in the forum, Check to see if there is any equity and then find the owners. You still may be able to buy from them directly if you can put a few bucks in their pocket. Problem is chasing these deals is exhausting and you can put a tremendous amount of time and effort into the project and never see it come to fruition. 

@Andy Mirza I will let you know what I find out.  Thanks for the advice.

@Alex Deacon Agree on all fronts.  I wanted to get the advice on here as I am moving on to look at this property after spending a couple of months on another project that looks like its dead in the water.  Looking at the mort. docs on the new property right now and definitely looks like equity is there.  Going to lob a call into one of the owners to see what additional info I can get.  Thanks!

@Ryan Duchak I'm in PA. From my experience, if the bank has already taken ownership of the property, they probably have a plan for it. Sometimes they sell at auction, sometimes they list it on the MLS with an agent and sometimes they keep the property as part of a rental portfolio. No matter what their approach is, I think your chances are slim that they agree to sell it to you instead of trying to get more money by having people bid up the price. Getting a hold of the right individual will be difficult as well. Big banks are black holes and the people who have the authority to sell if to you, probably don't want to be bothered with one home. I don't mean to be a downer and crazier things have happened, but I think you're fighting an uphill battle on this one.

You need to look up ownership via the county website, this will tell you whether to pursue the bank or the borrower.  

Originally posted by @Ryan Duchak :

@Andy Mirza I believe there is equity in the property.  However, notice of seizure and execution was published in November of 17.  My understand is that the bank has already taken ownership, so we would need the bank to agree to a sale prior to the auction.  Hopefully I am wrong about that!

@Ryan Duchak

With big banks, you are probably not going to speak to someone with a decision making power. They are selling distressed assets by the millions/billions. For smaller banks, you'll have better luck.

For Freddie and Fannie Loans, note that the bank may have restrictions on the sale price depending on what stage they are at. So in those cases, they can't even negotiate with you. Based on my past experience representing banks, the price that Freddie and Fannie comes up with are sometimes absurd. 

In terms of the ownership, I suppose it depends on when the auction is taking place. If you look at the actual records, it should be obvious. Most auctions I see are post-foreclosure sale properties --- meaning the bank has title to the property.

Disclaimer: While I’m an attorney licensed to practice in PA, I’m not your attorney. What I wrote above does not create an attorney/client relationship between us. I wrote the above for informational purposes. Do not rely on it for legal advice. Always consult with your attorney before you rely on the above information.