Bank Foreclosure - Complicated Situation with Former Owner
Hello Bigger Pockets - I have a somewhat complicated scenario I was hoping to get some advice/guidance on.
I have been following a bank foreclosure that's been on MLS for about a month. It is a site unseen purchase as the owner (former owner that was foreclosed on) will not leave the property. It's located in a luxury high rise in Boston. The bank is selling the place occupied. The bank is looking for someone to purchase the unit that is willing to take on the risk of evicting the former owner. In Massachusetts, this process has to be done via the same process as a tenant eviction even though the former owner has no ties to the unit any longer and the process can be lengthy and expensive from a legal fee stand point (6 months or more). That's Massachusetts for you.
I am very familiar with the building where this unit is located as I used to own a unit there that I sold this past Spring.
The bank has priced the unit in question at about $125k under market value. The mortgage owed is about 58% of the bank's current asking price so it's possible the bank would be willing to walk with a very low offer and they could still make out in the positive. Eg., an offer of say 70-75% of asking, given the situation. 75% of asking is about $270k below market value. Minimal work would be required (I am estimating $35k based on my familiarity with the building and some padding for some damage).
The reason for this post is I am wondering if folks have any thoughts on partnering with the former owner - compensation for cooperation type of deal? The former owner is a realtor in the area and she has shown properties of mine in the past so I have communicated with her in the past - February being the most recent. It's baffling to me how she would even end up in this situation. Something pretty strange must have happened.
My thought is that I would buy the place and share some of the profit with the former owner if she cooperates with me. Eg., she let's me see the place, do the renovations that I need to do and moves out when I sell it. She wouldn't receive compensation until she moved out on the flip side of the sale. Or maybe a small up front payment upon purchase with a larger back end loaded payment. Now this payment would have to be pretty significant I would think to get her to cooperate.
As ludicrous as this sounds, in the long run this might be the better approach rather than carrying the place for potentially up to a year and spending $60k on carrying and legal costs and going through an eviction process. Not to mention, I suppose I am helping them move on with their life and potentially helping them save some face. There is a lot of money to potentially be made on this deal, just need to approach it correctly. I am thinking about trying to proactively reach out to her but it's obviously a highly delicate situation.
The goal would be to flip this place pretty quickly after acquisition if I was able to pull it off.
Any thoughts on strategies or how to approach the former owner would be appreciated. I have her email address and phone number at the ready. Should I just be straight up with her and throw her a grid of how much I would share with her in different scenarios based on my acquisition price and my targeted sale price?
Thoughts?
Steve