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!
Hi John, like you, I am new to real estate investing and my circumstances are similar to yours, in fact, I have located a couple of pre-foreclosure properties that are scheduled for auction mid March. What I have done, so far, is I mailed out Yellow Letters to the home owners. My planned exit strategy is to get the property under contract and assign to an end buyer. My concern is, I am somewhat hesitant as to whether or not this exit strategy is appropriate for pre-foreclosure property.
Thank you @Neomi Riley for your reply! Since posting this, I've contacted two of the four siblings and I've discovered that:
- 1. the house has a reverse mortgage on it (the $98,500)
- 2. one of the siblings lives right next door and knew about the reverse mortgage
- 3. the other 3 siblings were unaware of the reverse mortgage, and therefore do not want to move forward with opening succession because they are uncertain about what debt responsibilities they might incur.
I've done some research online regarding "successions" here in Louisiana (referred to as "probate" everywhere else, from what I understand) and from what I can tell, they shouldn't have much to worry about unless they were co-signers with the deceased on debt related obligations. I've also discovered that those who don't want to move forward with the succession can basically "donate" their "inheritance" to the one sibling that does want to move forward. However, their willingness to do that may require some effort.
I've not been back in contact with either of the two that I spoke to yesterday. I'm somewhat paralyzed with uncertainty. I'd bet there is a deal here... a pretty good one I'd think! I'm just not sure how "involved" I should get in trying to move the siblings along.
Given my level of experience, resources, etc., I would love to get this under contract and turn it over to a buyer. After speaking with the two family members, I'm confident that the home would only need cosmetic changes (no one is available to show it to me before Monday) to make it easily marketable with a nice ROI. Four family members (in attempting to track down siblings, I've spoke to two grandchildren) have said that TONS of people have approached them about buying this property, including at least two who've offered to pay for the costs of "opening succession"!!!
I'm also still hopeful that some of the seasoned vets here at Bigger Pockets will be able to offer some advice. I'd LOVE to get some guidance from someone in the New Orleans area as well, and possible partner up on moving this forward! It seems that this would be a challenging "first deal," but I'm a sucker for a challenge. As I said in the initial post, I am here to work, learn and earn.
I wish I were experienced enough to offer you some advice Neomi. At the very least I wish you plenty of success! Hope to see you around the forums with good news!
All the best,
I am a reverse mortgage specialist, having originated HECM loans for over 6 years. None of the family members (other than a spouse, if any) can be obligated on the loan. Get the property under contract with the heirs, which would most likely be the adult children of the deceased. Get a probate opened; the lender will be willing to cooperate with the probate process, since they continue to collect interest during the process. I am also a probate specialist, if you have questions on the process.
Thank you @Dave Metsker for your feedback. I greatly appreciate it! I can't do much with this until Monday, when the "next door sibling" returns from out of town. In the meantime I'll search for a potential buyer/partner to help with moving this toward a conclusion, if I'm able to get the siblings to come to some sort of agreement. Stay tuned!
good luck @John C. I'm looking forward to see how this turns out. It just so happens that the very first house my partner called on was a reverse mortgage situation similar to yours. He did speak to one of the successors but I haven't asked him if he heard anything back from them.
Good luck, and please be sure to post an update.
If the heirs have had offers from other investor offering to pay for the probate, what would keep them from selling? Is it that the heirs are afraid they may be responsible for the mortgage debt? They are not responsible because their name is not on the mortgage. I am a probate specialist. When I say specialist, I mean I have bought probate properties, BUT I also help the heirs file the correct paperwork to transfer title. Saving dollars on attorney fee's. There are some investors who may be familiar with the purchase of a probate. I understand the laws, and proper procedure for filing the correct documentation (totally different than just a sell). I have been investing 11 years and probate 10 years. There are a couple of different probate (succession) procedures depending on the value of the estate. Pm me if you need help and want to partner up.
@Jeanine P. Good to know some else knows about "Final Distribution" (full authority based on (IAEA) to close out the probate process
Thanks, I am familiar with your post and have seen you around for a while.
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