I'm looking at a property in foreclosure. ARV of $165k. Seller wants $5k. The issue is it went to a sheriff sale, and the bank picked it up for $123k. Can't get inside, but based on the exterior, I could see $10-20k in repairs. So overall doesn't work, even if I want to hold as a rental. The seller tells me he got letters from the bank offering to settle for only $90-100k.
Is there anything I can do here? Property is in the redemption period, so buyer has the right to buy it back.
My thoughts are that if he had called before the sheriff sale, we could work something out, maybe a short sale, or assume the mortgage. Now, I'd need a new mortgage, and I don't think the bank would work with me for a short sale. Without the price drop to $90-100k, I'll have to walk.
Can I talk to a bank rep and see what they're willing to do? Would there be any point in calling the law firm that handled the bank's interests at the short sale?
@David S. did the seller get a "redemption letter" from the bank?
I'll have to ask. He said he's gotten a number of letters from them, but it wasn't clear when or what they were. I suspect they were offers to re-fi when he defaulted, before the actual foreclosure.
I have worked with this situation in the past. A short sale happens before the sheriff sale. Now the sellers have X amount of days to sell before the bank takes possession. My client in Michigan recently purchased a home during the redemption with a Wells Fargo FHA loan. No problem. The title company will use your funds at closing to redeem the house, pay off the bank, seller, agents, etc and hand you a deed. Talk to an attorney or realtor in your area familiar with these transaction. From my experience there was no difference but you must close by the end of that redemption period.
Why can you not get inside? Is it owner occupied?
@Bill Bodziak Thanks! I can't get inside right now because there are some terrible tenants in there(drug use/arrests, domestic disturbance calls, etc.). That's partly why the seller wants to get rid of it.
But if I understand what you're saying, I can still try and buy this as a short sale. I'll need an experienced realtor to work with the bank. Then just see what they can negotiate in terms of price?
If it already went through the sheriff sale then it should be handled like a regular purchase transaction, but it must be completed before the end of the redemption period. (at least that's how we do it in MI).
Also, don't forget about the costs and headache of evicting undesirable tenants....
Got it, thanks. Yeah, I am wondering about getting rid of the tenants, but right now I'm more interested in finding out if I can even get the property. And the tenant issue might resolve itself. Sounds like they're getting the water shut off on them due to non-payment. Here's hoping!
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