West Hollywood short sale or REO - $1 million

Foreclosures
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West Hollywood short sale or REO - $1 million

Ben Johnstone
west hollywood, CA · Member since 2014 · 37 posts · 3 votes

Hi Everyone,

This info kind of came about from my other posting so I thought id start a new thread in the appropriate section.

Theres a multifamily unit I've been looking into as it's a block over from where I live, a bit distressed and is vacant. From some research I've found out its been owned by the same person since 1999. They've refinanced a bunch of times and since 2009 has had 6 foreclosures! However it is still owned by the original owner. Im not sure what this means, whether it didn't sell, or ssa deal was made - 2 of the foreclosure ended up being bought by a LLC owned by the original owner who then later transferred it back(??)

The first foreclosure was for 1.1m then 1.05m then 1.25m then back to 1.1m.

I walk past the house YESTERDAY and a default notice is up. They are being foreclosed on again, date set for 3 weeks with the owed amount now being 1.35m

Don't worry I'm getting to my questions...

1)Im new to foreclosures, being that in LA there rant to many deals to be had and competition is crazy, but I was interested in this place before the foreclosure. Can anyone with expertise deduce anything about their situation from what i've described. How can the same person foreclose and the bank sell it to an LLC owned by that person?

2)The place is worth about 1.1 as is, but obviously I need it at a lot less. Clearly no one bought the foreclosures at 1.1 so my guess is it will be an REO. Is this a decent assumption to make?

3) I really need this house at less than $800,000, so my main question is when it comes to REO'S on million dollar properties, will the bank take such a big loss? If they are owed 1.35m they are going to be making at least a $350,000 loss already as no one will buy it above 1m. What should i expect?

4)What should be my strategy, should I call now and try and see what their thoughts are on a short sale or just wait. The whole history of this property is just so confusing, why so many separate foreclosures and why is it still owned by the same person?!

Any advice would be greatly appreciated.

(Even at 1m this could be a great deal - I just don't have the funds)

Thanks!!

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  • Phil Z.
    Real Estate Broker · Orange, CT · Member since 2013 · 951 posts · 218 votes
    12y

    1. It's unlikely the LLC pulled a fast one on the bank. They require the Articles of Organization showing the members and the owner can not be the buyer.

    2. Not following completely. But if it does not sell before the bank takes over, then it will become an REO. The REO will do their own valuation and wont really consider the Short Sale list price.

    3. They do not care what they are owed. They will do a valuation and will want at least 90% of their list price. They will move on price over time.

    4. I'm not sure you have the sales history straight. The owner can transfer the title to and from his LLC, but he can't buy it from the bank after they foreclose. The bank may have just required the property be in the original name he took the loan out in so he changed title back to the original name. In a short sale the bank will accept ~90% of their valuation (similar to REO). When making an offer on a short sale you need to estimate the banks BPO value.

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