All Forum Posts by: Christopher Phillips

Is that with the living expenses or total expenses?

575 Freeman Dr, Lexington, KY 40505 3 beds 1 bath 1,257 sqft

Large lot at 10,454 sqft. No interior photos.

Similar homes (3bed/1bath) for sale are in the $76,000 to $93,000 range depending on condition. Plaintiff's attorney is claiming their appraisal says the house is worth $90,000. But without a look at the interior that's hard to say, but fits in top of the range I gave for similar homes on the market.

According to the auction, Mary Sue Shelton died on August 1, 2014. Upon her death, all right, title and interest in the subject property became vested in Teresa Ann Mullins and Pamela Jean Shelton.

So, it would appear that they couldn't afford to keep the house. So, the trustee is now auctioning off the house to recoup the principle, interest, and fees owed to the mortgage servicer Green Tree Servicing (appears to be part of Ditech) for at least $78,667.82. No mention if the house is still occupied or if there are other parties with claims to liens. Fayette County doesn't appear to have public records search, so I couldn't dig into the other possible liens.

Unlike mortgages that have to go through lengthy court battles for a foreclosure, trust deeds give the trustee the ability to very quickly post your house for auction after a notice of default has been issued (usually like 3 - 4 weeks). Kentucky is a lien theory state, but every lien theory state still might have the occasional trust deed. Trust deeds make it very difficult to do a shortsale because of the short period from notice of default to auction. In states that are predominately trust deed based there are almost virtually no shortsales.

Kentucky also allows for a owner that lost a house at a foreclosure sale up to 6 months to redeem the house by paying the auction price plus interest (10% per annum in Kentucky). Doesn't usually happen, but it can. IRS also has a redemption period of 120 days if there was an IRS lien on the property.

There are some big questions to answer: 1> the condition of the house and potential occupants. You can do a drive by and see if it's empty. Take a peak in the windows and see what kind of shape it's in. 2> do a lien search at the county clerk's office to see if other debts are involved besides Green Tree Servicing. 3> understand the rules and such for the auction (deposits, financing) 4> and determine the max you're willing to bid on the property.

K Khanna if it was a trust deed, then it wasn't foreclosed. After the notice of default, there would be a period of time before the trustee could auction off the house... In this case, it looks like the notice was issued and the loan sold in the same month. Sounds more like the owner was behind and sold off the house to avoid the eventual loss. If that's the case, then it wasn't a foreclosure, just an owner that was behind.

I think we're missing some parts here. If the house was going to foreclosure owing $78k, it probably is worth less than that or else they would have just sold it to stop the loss. Most homes go to foreclosure swimming in debt.

The appraisal is probably the better bet. The county assessor is often behind the times and is probably using a general ratio for the area. Mention the differences to your CPA and get their advice.

I agree it's overpriced. Not sure why a joist would be wet from the shower. Something else is going on back there. If the bathroom was not properly vented, you would get mold, maybe peeling wall paper. Not warped Sheetrock and wet joist. A wet ceiling joist means water penetration from the structure that is running unchecked. Bowed out Sheetrock means the board was wet from inside the wall and is pulling away from the structure. Sheetrock and paint are cheap, but a wet joist means something else is happening that can be expensive. If a nicer unit went for less money you need to get the price down based on condition/repair needs or walk....

Zestimate is virtually meaningless. I wouldn't use that in any conversation except to say that it's meaningless... If you want to know the value of your home you need to find 3-4 comparative homes that were recently sold: same style, similar size, sold within last 3 months, within 1 mile, same zip code, same school district, similar condition. Same part of town if in a named subdivision/hamlet. Same part of town if divided by a highway or other major structure and you noticed marked differences in prices. Try not to go past 6 months if you can help it. An example: 3 bedroom 2 bath colonial with attached garage similar lot size similar amenities like pool or deck. If you can't find exact number of rooms and baths then you have to make adjustments in value to make comparison, which is where most of the work is at. Adjustments in comps is a bit of an art. You take the comparison and adjust value up or down to make it comparable to the target home. So a 4 bedroom would have to be adjusted down. A 1 bath would have to be adjusted up. Same thing with lot size, no deck, garages... A simple Example: $400,000 house 4 bedrooms 1 bath. Everything else the same. You adjust it down $28,000 to $372,000. But add up 1 bathroom $9,000 to $381,000. Now it is comparable. Adjustments are area related. They depend on the differences between two similar homes and within similar price range. So you have to look at sold homes in the area and see what a difference gets you. Condition is a big question mark. You need to visit the other listings or at least view the photos of the other listings. Sometimes those are removed after a sale. If the house was on the MLS, the photos are still in the archive and a local Realtor can get those for you. They can also help you refine your analysis. Do the same thing with rents. Search for homes for rent in your area. Rents can vary depending on part of town you are located in, so try to get as close to your home as possible if you see a lot of variation. Taxes are relative. I would kill (virtually speaking) to have your taxes.

Let me see if I understand this correctly...

You want to buy a house that is in probate, which can take a long time. So you want to lease it for now, and then buy it when the probate is over. Correct?

If that's right, you are only leasing it. So, there is no financing now. So you can't refinance something that you don't own and pull your rehab money out.

That brings up the other question. Lease to own is really lease with an option to buy. So, you probably don't want to sink money into a house you don't own in the event that you don't actually buy it when probate is over (things happen). Can you rent it out while you leasing it? Depends on the agreement. Since you don't own it, that would be subletting and would depend on the agreement.

At the end of the probate and you buy the house, your loan will be based on the appraised value of the home. You would still need to apply and qualify for the loan and put money down. If you're occupying it you could do 3.5% down going FHA. If you're renting it, it would be conventional loan since you won't be occupying it. But they will only lend to you based on the agreed upon purchase price. The loan is always based on the lower value of sales price or appraisal. You can do a HELOC if you have equity you need to tap, but that's based on your ability to borrow.

Have you been pre approved for the purchase price?

Can they back out of the contract? It's possible to find some language in the agreement that allows them to try and break the option, but it won't necessarily be easy to do.

It depends on the area. There are times when certain types of investment strategies dry up due to competition or market dynamics. I know a lawyer that had 100% of business just dealing with foreclosures after the market turned down. He's gotten out of that now. He said foreclosures have dried up for him.

I know some flippers that are having a hard time finding properties that work for them. So they have to expand their search area.

Market dynamics change so you have to adjust to survive in the long run.

What did you appraisal state for the land versus improvements when you bought the property?