I know a house is going to foreclosure-How do I get it?

[Kim Handelman]

HI Everyone,

I've had my eye on a property to live-in flip for awhile (it's been an over-priced short sale and the agent said the bank wouldn't budge on price). The owner passed away a few weeks ago and I just found out the family walked away so it's in the foreclosure process. I'm hoping the bank will be more realistic on price now. Since flippers circle like vultures in my small town and I don't have cash (I'll have to finance), I want to try to get to it before it hits the MLS. I am an agent if that helps me. Any ideas?

[Ron S.]

Originally posted by @Sanjay Aiyar:

Originally posted by @Ron S.:

Originally posted by @Sanjay Aiyar:

All you can do is keep asking the bank if they're interested to see if they change their mind.  You'd have to use hard money to do so.  However, that would only work if you can buy it for 70% of the market price (or pony up any amount over that).  And I wouldn't do that unless you are 100% sure you can get a mortgage on this property/your comps and value are correct.  If you wait until the auction, in my experience the bank will bid up to the amount of the loan balance, which would be much higher than what you want to pay anyway.

 It wouldn't matter what the bank is, or is not interested in as they don't own it and can't sell it until/unless they end up owning it. If they go to foreclosure sale, they will try to get as much as the market will bear, up to the loan balance. They don't bid beyond loan balance but 3rd party bidders can and might. Whenever a bank considers any approval for a short sale, one of the calculations is, "What option lowers our risk of taking a loss". Whichever path nets them the most in recovery, is the path they will typically choose, up to the total debt.

That's not really true.  She said offered a price the bank refused to accept.  That implies the current owner (or whoever has control of the estate) accepted the offer but the bank didn't give the ok.  The bank's ok is needed.

What you said about the bank trying to get the most the market can bear at auction doesn't make sense. Their representative is there to bid up to the upset price in small increments. Then they stop. If no 3rd party bids, then the bank gets it at the opening price. Then the bank will list it REO. If a 3rd party bids just $1 over the upset price, they 3rd party will win it. It's that simple. It's a preset set of instructions the bank gives to their representative.

It really is true. The bank doesn't "sell" a property. The bank can only approve, deny or counter a proposed net proceeds amount being offered to them. That doesn't mean they are accepting or denying a purchase price or, accepting or denying any offer. They can only dictate what their minimum proceeds amounts are. They can add language about 3rd party fees, payments outside of the HUD, seller leaseback, etc. but can't approve or deny a purchase price. What you have to realize is its the proceeds amount of the sale they approve or deny, not the actual purchase price.

You stick with your assumptions. I'll stick with doing foreclosures and short sales for the last 25 years. Most buyers/sellers/agents fail to realize banks cannot say and do not actually say what an acceptable sales price is. Yeah, it looks like we are but at the end of the day, all we are saying is what we will accept for proceeds short of the payoff amount, not the sales price.