Preforeclosure with equity - is there a deal?

Question

Chicago burbs -

Have a property in great condition , great location :seller Asking : 250K ; home in default , preforeclosure , outstanding Loan: 178 K , house worth about 260K Motivated

is there any way to make a deal ? Not familiar with preforeclosures

Wayne Brooks · Answer

All depends on what the seller is willing to accept......sounds like he’s asking about the right price.

Maurice George · Answer

David, any updates on this property?

Kumar Tummalapalli · Answer

Hey @Mike H.  great points , as always .

Seller doesnt seem to be in the mode of " I got to avoid this foreclosure and get off this property " . She is still in " I want to pay off the Mortgage and make money "  :-)

House doesnt seem to need anything - pretty good condition , new roof , recent systems .

I will offer 210k and see ...

Brett Goldsmith · Answer

This is simply a standard sale on a time crunch depending on teh foreclosure status. The only way to make it a deal is if you and seller agree on a price that is "deal" worthy for the subject property. Seems like he is going for retail price.

Mike H. · Answer

If the owner is in default, they're going to take anything at this point if it helps them avoid a foreclosure on their record.  Ask them to get a current payoff from the bank to see how much that would be. Then work backwards (estimated ARV minus the bank's payoff as the  plus your estimated rehab)  and see if there's enough room for you given your own risk tolerance.

If the payoff of the loan is 178k and the house is worth 260k, you still need to know what the estimated rehab is to see if there's a deal. If the 178k number is what was owed 6 months ago, then you really need to get the payoff amount from the bank to see what they will need to close.  And you may need to offer the seller 2k as a kicker just to get them to show up to the closing.

Depending on how much rehab is needed, you seem fairly close to the numbers working for a possible deal. Also depends on how much your time and money is worth. If the estimated profit is 30k, is that worth the risk? Is it worth your time? 25k?

Kumar Tummalapalli · Answer

Thanks @Carl Lee

So subject to ...lets say her pay off amount is 200k , then it might be a deal , provided she is ok to just get done with it .But if seller is expecting to not only get out of the loan but also expecting some cash - lets say 20k , then it means 220K Al in for me

So looks like :

1. total pay off need to be less

2. Seller should be interested in avoiding a foreclosure and just get out off the house

Is this a fair summary ?

Tarun

Kumar Tummalapalli · Answer

Correct - thats how they start Usually . When I toured yesterday , she is packing all her stuff , moving out of state .

I was thinking propose 210K and see .

From a preforeclosure point of view - I was thinking if there is a different way to structure this , by taking over payments and if there is any advantage to that ?

Preforeclosure with equity - is there a deal?

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