From short sale to pre foreclosure auction

4 Replies

Good Afternoon,

A few months ago I found a local property for sale listed at 49k-short sale. I offered 45k the owner accepted, but the bank had to approve the offer too. The bank countered at something ridiculous like 85k and I walked away.

The house has been on the market ever since. From time to time I would look at it again wondering what would be an offer the bank would accept. Today I see the property still listed for the same price, but now it shows on Zillow as a pre-foreclosure auction. Is there any chance of stepping back in to this and making a deal with the bank?

Victoria

Hi Victoria.
When trying to buy a short-sale, it’s all about the agent working with the bank and how versed they are. Sure they listed at $49k, but the bank will determine the price based on a bpo. That being said, when submitting he offer, it’s imperative to substantiate your offer. Such as estimate for repairs, comps etc, which essentially is you providing proof to the lender why it’s only worth them accepting $45k.
Do you know the Value of the repairs and value of the house in a repaired condition?
Also. Is the property in Auction stage, or just in pre-foreclosure stage?
Is the agent still listing the property?

Thanks for the help with this John!

Repairs are estimated at 32k, ARV 95-100k.

Looking at the property on Zillow it shows as pre-foreclosure auction with an auction estimate at 59k.

Victoria

I️ would ask the agent handling the short-sale to re contact bank and negotiate the offer. The challenge is that many agents aren’t well versed in working with lenders on short sales. Normally I️ would have paid for my own appraisal, have one or two repair bids, photos etc so be able to negotiate with the lender and help the bank appraiser do their job.
If you can’t get anywhere with the agent, buying at auction may be the only option but if the lender has an opening bid at $58, then it doesn’t sound like it’s worth it.
Hope that helps a little.

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