Help with steps needed to wholesale home before Sheriff Sale

14 Replies

Hi BP, 

Forgive long post but I feel all is necessary info. I found a home driving for dollars (how I go about finding home to wholesale) in which I'm able to reach out to the owner. Home is a 4 bed 1.5 bath 2 story home and has been vacant for 4 years. Owner was renting the home but evicted the tenants due to financial reasons. Home is valued at 115k ARV (comps ran) and repairs are looking to be for someone sub-contracting investors 40k and do-it-yourself investors 28k. Details on what needs to be done, ask. 

My goal was to negotiate the home for 25k to 30k along with a 6,500 wholesale fee. Owner kept dodging me though not allowing me the opportunity to even see the inside of the home till I came to his workplace yesterday. I couldn't understand why after a week of stalling with me he wouldn't simply let me see the home and make a offer. I already have 2 buyers interested in buying the property for anywhere around 30k to 40k so pretty much just need him to commit to my offer. When I meet him he opens up with the situation. 

Owner went bankrupt 4 years ago, in a effort to be rid of the home in which at that time he owed 44k on it. Don't understand how it has come to the point that Chase banks is doing what they are doing if he included the home in bankruptcy. The man is 66 years old and set in his ways which is a bit difficult to deal with because he answered questions with little detail; this is the best I can say of the situation. 

Summed up, JP Morgan Chase has started a judicial foreclosure for a total of 81k in accrued interest, fees plus including the 41k balance and the like for the past 4 years concluding with the home going up for sheriff sale this May 1st. I don't know what to do from here as I told the 2 buyers interested in the home the situation and they don't have any strategy but simply having money to buy the home for the price they have in mind. The owner said he will cooperate fully if there is a route he can go other than his home going up for sheriff sale. He don't know of the repercussions of his home selling at sheriff sale, if it even will neither do I. I have seen the property inside and out already so I know whats going on with it physically.

I have no strategy of how to work this home except maybe contacting the bank but I don't know the steps of what to do, ask, say, need or understand. I have more I want to write but the post is getting long. This is a gist of the situation and someone experienced with this should understand where I'm getting at. I really want this deal done along with a owner kinda crying for help.

Bump... about to start my day off and would love some ideas from some folks on how to handle this situation.

so you found buyers before you locked the property up under contract? 

@Chavis Atkins

Just looking at the numbers, I don't see any deal here. You said you're trying to negotiate buying it for $25k - $30k, but that the amount owed is $81k. That would be a huge short sale. If the bank would even accept a short sale, they would probably list it on the MLS first to get the most amount of exposure and offers.

- Tom

There's no equity, and it's unlikely the bank will short sale for that price.  No deal here.  What part about the foreclosure do you not understand?  BK doesn't transfer title the bank, they still have to foreclose.

Originally posted by @Tom S. :

@Chavis Atkins

Just looking at the numbers, I don't see any deal here. You said you're trying to negotiate buying it for $25k - $30k, but that the amount owed is $81k. That would be a huge short sale. If the bank would even accept a short sale, they would probably list it on the MLS first to get the most amount of exposure and offers.

- Tom

 Well the 2 buyers I have are willing to pay 40k for the home. Home is valued at 115k... with the owner owing 81k to the bank, I figured that they would short sale it for half the price of the home. I mean the house is in need of at least 40k in repairs and if the bank would choose to put it on the market, they be getting the same amount I would think max for the home by the time they even put it on the market. I figure the condition of the home will not allow for a sale close to 81k.

Originally posted by @Everett Marshall :

so you found buyers before you locked the property up under contract? 

 I always look for buyers to a home before putting it under contract. I don't want to waste time searching for someone once the home is under contract. My relationships with the buyers I use won't and have not gone behind my back before. They know what the relationship comprises of and do their part while I do mine.

I'm confused as to why you are offering such a little purchase price on a house valued at $115,000. Good luck on that offer. I'd say you would have a better shot at $69,000 60% ltv on the $115,000 ARV. You need to ask the homeowner if he did a chapter 13 or 7. As there are differences in how they are handled. Or you can get a pacer account for free and check for yourself for .08 per page.

Banks are notorious for going after people after a bk. In a chp 13 owners have to repay any past due amounts on mortgage thru a repayment plan to a bk trustee as well as their current payments. Sometimes they can re do the plan but generally they are 3 to 5 years. There are different benefits to either one both can be poison if you don't have adequate representation.

That said if the homeowner did a chp 7 didn't reaffirm his debt he can/could of walked away without any ramifications. Except if the bank started to foreclose then didn't for whatever reason. Which leaves the homeowner still as the owner on title until sale happens or is sold. If this is the case he can quit claim his interest in the property prior to sale. Although, he may not quit claim to you if he can find his own buyer who will give him more than you will.

Also, the bank shouldn't be able to go above initial loan balance unless there is a description of fees. But these can also be negotiated in some instances. 

I'm not sure there is a  deal here. The numbers don't work.

But, if you want to. The homeowner still has the ability to short sale the property to you. Start a short sale, get the homeowner to to sign off on everything online. Use dotloop or some other online signature system. Make it easy for the homeowner. But since he's 66 that will probably be a hand signature.

Just curious, is he still living there? 

Offer the bank 30k, request the foreclosure be postponed, keep in mind you can't do that until the short sale is "in their system" usually assigned to an asset manager, negotiator or whatever, Chase is using. Expect at least a week of delay on the initial process.

The bank will counter after there dd, just keep following up and keep this one on the back burner.  

Originally posted by @Kathy Kalb :

I'm confused as to why you are offering such a little purchase price on a house valued at $115,000. Good luck on that offer. I'd say you would have a better shot at $69,000 60% ltv on the $115,000 ARV. You need to ask the homeowner if he did a chapter 13 or 7. As there are differences in how they are handled. Or you can get a pacer account for free and check for yourself for .08 per page.

Banks are notorious for going after people after a bk. In a chp 13 owners have to repay any past due amounts on mortgage thru a repayment plan to a bk trustee as well as their current payments. Sometimes they can re do the plan but generally they are 3 to 5 years. There are different benefits to either one both can be poison if you don't have adequate representation.

That said if the homeowner did a chp 7 didn't reaffirm his debt he can/could of walked away without any ramifications. Except if the bank started to foreclose then didn't for whatever reason. Which leaves the homeowner still as the owner on title until sale happens or is sold. If this is the case he can quit claim his interest in the property prior to sale. Although, he may not quit claim to you if he can find his own buyer who will give him more than you will.

Also, the bank shouldn't be able to go above initial loan balance unless there is a description of fees. But these can also be negotiated in some instances. 

 69,000 to purchase the home? I don't see how the number will work at that purchase price if it was accepted. 69,000 + 40k (repairs) + wholesale fee of 5,000= 114,000... why would a investor want me to wholesale that to them when they will make no profit off the home? I don't understand how you came up with 69,000 Kathy as a good price for a investor to buy the home. 

As I said in the starting post, the owner is old and probably don't comprehend most of what I ask him. I asked if the bankruptcy was chapter 7 or 13 and he said he don't remember.

Help I'm trying to get is what do I need when I'm trying to go through the bank for this "short sale" process? Is there particular information from the owner that'll I need? What am I to expect dealing with a bank like Chase? Stuff of that nature.

Originally posted by @Ericka Parrott :

I'm not sure there is a  deal here. The numbers don't work.

But, if you want to. The homeowner still has the ability to short sale the property to you. Start a short sale, get the homeowner to to sign off on everything online. Use dotloop or some other online signature system. Make it easy for the homeowner. But since he's 66 that will probably be a hand signature.

Just curious, is he still living there? 

Offer the bank 30k, request the foreclosure be postponed, keep in mind you can't do that until the short sale is "in their system" usually assigned to an asset manager, negotiator or whatever, Chase is using. Expect at least a week of delay on the initial process.

The bank will counter after there dd, just keep following up and keep this one on the back burner.  

 I assume there is no deal here due to the situation as well but there are short sale specialists on these forums and I believe in that there is always a way to work a home, just got to know your options. I would love to start a short sale process but not know exactly how to start it is the problem. The owner does not live in the home, home has been vacant for 4 years. Last time someone was living in there was a tenant he was renting to.

I would suggest a google search under the homeowners name to see if it pops up what type of bk he did. Or the pacer account.   See what a real estate agent/appraiser gives as a BPO value on the current status of the property. Show the combined repair costs for items to be replaced or updated along with the contractor's cost with your cash offer amount. 

Obtaining the quit claim deed as well could save them costs as w/the bk discharge they can't attempt to collect/contact if chp7 without a reaffirmation agreement.  This could give you a leg up. I definitely recommend pacer for everything in the bk record. Also you may want to try and purchase the note vs the short sale w/qcd to close quicker. Be sure to check county records or do a  title research to be sure of no other liens that could impact you getting less than you expect cause you didn't cover your bases. 

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I'm curious why you guys think 66 is sooooo old.

You need to be careful about taking advantage of us senior citizens.

Thanks for the help bp members! I will take all the advice into consideration.