All Forum Posts by: Steve Trotta

Hi - I am thinking about attending a foreclosure auction and the property owner has some Sheriff's judgements against them here in Massachusetts.  

What type of liens or judgments become the responsibility of the new owner in a foreclosure in Massachusetts?  Does anyone have experience with this?

Any thoughts would be appreciated.

Thank you,

Steve

@Steve Babiak and @Lumi Ispas

I appreciate both of your feedback and Steve you are correct on my mis-understanding of "Foreclosed on".

With all of that said, if there is a property that is listed to go to public auction it sounds like it is still possible to strike a deal with the current owner.  

It seems like this might be the case with the circumstance I encountered on the last auction I was looking at attending.

Steve

Hello - I have a question which I think is probably pretty basic to folks that are familiar with the foreclosure process.

Is it possible for the owner of a home to sell their house after they have been foreclosed on?  I feel like it isn't unless they work out some sort of a deal with the bank.  That said, I came across this situation recently where I was going to attend an auction to bid on a property and day of I called the attorney to make sure it was still on and the attorney said the auction was cancelled as the owner sold the property.  I'm not sure if this was just mis-information or if something else may have happened here?  

Any thoughts would be appreciated.

Thank you,

Steve

@Ann Bellamy and @Mike Hurney

I appreciate the insight and information.  Sounds like a nightmare that @Tim Walls went through and not something I would want to get involved with.  Carrying costs will be too high on this for a long drawn out procedure.  I would fully anticipate six months but anything more than a year would be a real issue.  Sounds like the eviction route is the only route though so that's the decision point and risk here.

@Mike Hurney

Sounds like you haven't had great success with Cash for Keys.  Why?  Any examples?

Steve

Hi - Always best to consult your CPA on this for pro advice.  

However, when I did my first few flips I did them as a sole prop, no corporation. Recently I formed two LLC's. One is for me to run my flips through, the other is with a partner that I run our deals through. There is one school of thought that suggests you should create an LLC for every flip you do to mitigate as much risk as possible. I don't do that.

LLC's tend to be easier to form and to maintain at tax time and seem to be more flexible than S-Corps. I have an S-Corp as well for another business.

@Wayne Brooks and @Michael Jones

Fairly certain this is first mortgage position.  It was a 20% down deal on one loan back in 05, unusual for the time period.  No other mortgages on file.  My attorney checked the records on the foreclosure and it's clean.

From a lien stand point, I see on the public record there was a lien from the condo association totaling a little over $6k filed in August of 2014.  No muni liens I am aware of but I need to check on property taxes owed. 

@Brian Burke

I appreciate the feedback.  I agree the eviction procedure is an option, it is something I have thought about at great length as well and was the primary strategy until today when I thought about sending this message out to bigger pockets.

@Richard Ng

Great points in regards to the ethical angle.  I need to research this more.

@Wayne Brooks

Typically the banks around here will buy back the property as they think they can make money given the very strong market.  It's odd that an owner wouldn't sell it themselves in this market.  I agree with you that it "seems like something is missing" but  I haven't uncovered it yet.  Let me know if there is anything else I should look out for here.

Steve

It's not a short sale

Hello Bigger Pockets - I have a somewhat complicated scenario I was hoping to get some advice/guidance on.

I have been following a bank foreclosure that's been on MLS for about a month. It is a site unseen purchase as the owner (former owner that was foreclosed on) will not leave the property. It's located in a luxury high rise in Boston. The bank is selling the place occupied. The bank is looking for someone to purchase the unit that is willing to take on the risk of evicting the former owner. In Massachusetts, this process has to be done via the same process as a tenant eviction even though the former owner has no ties to the unit any longer and the process can be lengthy and expensive from a legal fee stand point (6 months or more). That's Massachusetts for you.

I am very familiar with the building where this unit is located as I used to own a unit there that I sold this past Spring.  

The bank has priced the unit in question at about $125k under market value.  The mortgage owed is about 58% of the bank's current asking price so it's possible the bank would be willing to walk with a very low offer and they could still make out in the positive.  Eg., an offer of say 70-75% of asking, given the situation.  75% of asking is about $270k  below market value.  Minimal work would be required (I am estimating $35k based on my familiarity with the building and some padding for some damage).  

The reason for this post is I am wondering if folks have any thoughts on partnering with the former owner - compensation for cooperation type of deal?  The former owner is a realtor in the area and she has shown properties of mine in the past so I have communicated with her in the past - February being the most recent.  It's baffling to me how she would even end up in this situation.  Something pretty strange must have happened.

My thought is that I would buy the place and share some of the profit with the former owner if she cooperates with me.  Eg., she let's me see the place, do the renovations that I need to do and moves out when I sell it.  She wouldn't receive compensation until she moved out on the flip side of the sale.  Or maybe a small up front payment upon purchase with a larger back end loaded payment.  Now this payment would have to be pretty significant I would think to get her to cooperate.

As ludicrous as this sounds, in the long run this might be the better approach rather than carrying the place for potentially up to a year and spending $60k on carrying and legal costs and going through an eviction process.  Not to mention, I suppose I am helping them move on with their life and potentially helping them save some face.  There is a lot of money to potentially be made on this deal, just need to approach it correctly.  I am thinking about trying to proactively reach out to her but it's obviously a highly delicate situation.

The goal would be to flip this place pretty quickly after acquisition if I was able to pull it off.  

Any thoughts on strategies or how to approach the former owner would be appreciated.  I have her email address and phone number at the ready.  Should I just be straight up with her and throw her a grid of how much I would share with her in different scenarios based on my acquisition price and my targeted sale price? 

Thoughts?

Steve

I agree with Elizabeth...... Take the emotion out of it.  Presumably, you know what number works for you on this deal.  Go with that number and include an expiration date - could be 6 hours could be 72 hours, whatever you feel comfortable with.  There can be a lot of gamesmanship by listing agents (delaying, phantom offers etc..).  You need to control what you can and move on to the next one if your best offer isn't accepted.

How long has the place been on the market?

Steve