Advice Needed -- Want to purchase short sale or REO for Home

Foreclosures, Short Sales, Tax Foreclosures
1

Greetings, all…

Newbie here, and I’m hoping some of you will help me.

Here’s the background:

… Hubby and I have 80k cash to put down on a property.

We are in our early 50s, both hard workers. We currently live in a lovely old home which we restored ourselves, but…it’s too big now with 3 out of 4 kids gone (three floors, six bedrooms – you get the picture) and plus we want to move out in the country – less house and more land to putter around on chopping trees, a garden and maybe some goats and chickens and all that. Oh, and a pony for the grandkids would be nice. ; ) We have somewhere between 70-80k in equity.

Hubby is master craftsman/carpenter, had his own one-man business over 20 years. Can do electrical, plumbing – the whole bit. Not braggin’, but his work has been featured in several magazines and he has remodeled/built many custom homes for people whose income far exceeded ours by several zeros – kitchens and bathrooms a specialty. Oh, and stonework, too.

The down side: when the economy tanked several years ago, hubby was right in the middle of several projects and in plain English, got screwed. So we found it necessary to fold his business and claim Chapter 7 bankruptcy (March 2010). We kept our home and cars, and finished paying for the kids’ schooling, thank God. Should mention we always had “excellent” credit prior to the bankruptcy. Never a late payment on anything, ever.

I work full-time at 85k a year, same job 18 years. Hubby is unemployed, at least so far as Uncle Sam is concerned. Plus he’s currently helping our daughter and husband build a kitchen in their new (old) house. But I digress…sorry…

We recently had an offer accepted on a REO “AS/IS” gut rehab property that we wanted to purchase for ourselves. We found out about it through a realtor/friend – kind of a fluke. The property has just the right acreage, a great outbuilding for my husband to work out of, trees to clear – the whole bit. The house itself needs everything, and I do mean everything, but structure is built like the proverbial brick sh*thouse. Plus it is close enough to our current home that we could work on it and pay taxes on it, keep it alive, so to speak, until at which point our current home sold and/or time enough had passed to get a 230k loan and then we’d go for the gusto. The one contingency we put in the contract was to have the underground oil tank inspected. Soil results revealed some contamination which we weren’t too terribly concerned about until we discovered oil in the well. Let’s just say that was the beginning of the end. Best guess quote from environmental specialists ( 3 separate ones) was about 50k to start remediation and then 10-15k for a well. Bigger concern was the potential future liability should the oil plume have leaked into neighboring properties, not to mention the rest of the state’s groundwater. Bank would not budge on the price or consider remediation. Bye bye lovely property. No deal. <<>>>

There is only a certain radius around our current home that we can reasonably move to for me to be able to drive to my job. Good news is there are some nice homes in the surrounding countryside. Problem becomes most are priced beyond our reach, or if they are not, they’re too small or too close to the road or hubby says they’re “cookie cutter” or “built like crap”. And I hate to say it, but he’s always right. About houses, at least… ; )

So I’ve been going on zillow (amateur, I know) and I just click on the various townships in our county and the next county over and I look through the homes listed for sale. Of course I stay away from the big figures. I have observed a peculiar thing when sometimes I’ll click on a “listing” (signified by a little read house) and I’ll get an aerial view of a property that says “this property is in pre-foreclosure…a deal might be struck with the owner/bank.” Then it refers you to foreclosure.com, which I haven’t signed up for, but am considering. But here’s the kicker: sometimes a few months later, I’ll go on zillow, and one of those same houses is now listed as “sold” and for a really, really, low price.

So I’m thinking there must be an insider’s track to getting a deal and I ask our realtor friend about it. He says “oh…those are short sales…you need to look at them under lender-approved search in the mls” And he gave me his password to his mls so I could read the stats on those aerial properites, …but nope, I’m not seeing those properties at all.

Here are my questions:

What are we, or what am I, doing wrong? I mean aside from getting emotionally attached…lol. Do I sign up for foreclosure.com? Is it a bogus site? Is zillow even remotely accurate as to what’s on the market? And how in God’s name do we get lender approval with a bankruptcy only 16 months ago? I’m thinking there must be a way, but more importantly, I’m feeling there is the right place out there for us, and it’s gonna appear pretty soon, too.

I just don’t know how to go about finding it, much less how to finance it without having the cash-in-hand from current house.

Please help – and no worries – we are not competitors, we are not at all interested in buyin’ and flippin’, though we’re prepared to do some serious refurbishing to move into the home we want to grow old in.

Regards,
Temperance

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Temperance, interesting story and let me first say best wishes with everything. I’m confident everything will play out as you hope for in the future. As for some of your questions. . .
First, yes, it will be quite difficult to obtain financing with a recent BK on your file in today’s lending environment. You’d be better off finding a seller willing to act as the bank and finance the purchase of their property. Easier still, look to do a longer term lease purchase on a property. Put down some cash, (and keep most of that $80K in your pocket where it belongs).
As for finding the great deals, I don’t know that you can readily do it working a full time job as you are. Can you talk with a local investor friendly Agent who knows that market? That may be a good starting point.

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Thank you for your kind advice, AJ. And I will check out your link about lease-purchase. I presently know nothing about them. How do they differ from “rent to own”?

A few things – Yes, working full time is an obstacle. But then again, we live in the county seat and I know virtually all the ladies who work in the local courthouse as their kids grew up with mine. Still, I don’t know any investors. ; ) But I do know how to look up tax records by lot and block number using the old microfiche machine.

Plus…I am a fast learner and I have significant time off in the summer to pursue a “project” in-depth. By “project” I mean learn how the good deals are found, and in the meantime zero in on properties that interest us. Like I said, there’s only a certain radius.

I was thinking, too, that I can tell which roads those mysterious aerial-view-only properties on zillow are located on, and there ought to be a way to look at longitude/latitude to at least be able to get a location and then an address if I like what I see.

I think we have a bit of an edge on a social level, too b/c is hubby is well-respected and I have lived in this same(relatively) rural county my whole life, so even if I don’t know anyone in a particular area, it’s a pretty sure bet I will know someone-who-knows-someone-who-knows someone who lives in that particular area and will be happy to give their perceptions of a particular property, to tell such things as whether someone was murdered there or if there were problems with the septic and the like. : o The oldtimers in the country are still suspicious of newcomers so they are always more forthcoming with info if you can identify yourself as a local and talk small talk before business. Like with the REO property, we did not know the surrounding neighbors, but we introduced ourselves and found out they knew my daughter’s in-laws. So as far as the neighbors were concerned, we were “in”.

Now of course these kinds of connections can’t pay for a property, and certainly I would not use these to turn a buck, but it does go a long way toward being accepted, and getting tips and leads. And of course when we found out about the oily well, we went back to inform those neighbors. It was the right thing to do.

Then, too, I was looking at the “realty clubs” listed on this site and in my state I was rather surprised that there is such a small membership. Where they meet is actually not far away. So I had a thought just to ask if I could attend a meeting, but I don’t know if that’s out of protocol or not.

Anyhow, I appreciate your feedback. If you or anyone else thinks of anything else, I welcome any and all thoughts/advice.

Regards,
Temperance

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Thank you for your kind advice, AJ. And I will check out your link about lease-purchase. I presently know nothing about them. How do they differ from "rent to own"?
They don't. Different way to say the same thing.
Then, too, I was looking at the "realty clubs" listed on this site and in my state I was rather surprised that there is such a small membership. Where they meet is actually not far away. So I had a thought just to ask if I could attend a meeting, but I don't know if that's out of protocol or not.
Most of the clubs are of limited value, in my experience. They have a speaker of the month, selling the latest get-rich-quick crap. You'll learn more, and sooner, by actually speaking with other investors as opposed to listening to some salesman. :bs
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Yah I kinda figured those meetings would be boring. But the funniest thing happened today and believe it or not I actually thought of you as I was droving home. : o Scary, I know.

Anyhow, here’s what happened:

I went to check out a property listed in the regular listings “AS/IS”. Ranch house on 11 acres, mostly wooded. House is small, but eh, I figure…easier to clean. So peek in the windows and it’s actually rather nice inside. Someone was obviously working on it at and then stopped at some point. A small-ish outbuilding and another lean-to type thing w/about three cords of chopped wood.

Hmmm…, I think, gotta be something wrong with this place…so I walk around try to get a feel, look for telltale signs of an underground pipe…look a the foundation what I can see, anyway, looks like a poured foundation as opposed to cinder block…hubby will like that better.

All in all there was a good feng shui feel about the property but still…ya know what they say about too good to be true.

So I decide to take a little drive down the lane where I know there’s farmhouse, hoping someone will be home and willing to talk… Sure enough, there’s a feisty little lady late sixty-ish or early seventy-ish working in her flower bed…happy for company, really. Told me the whole history of the ranch property and then some. Says the reason it won’t sell is it needs a septic and the septic can only be placed on a corner of the property that would mean pumping uphill. Says right now there is no septic, just a pipe underground draining into the woods. :o

So she asks me what they’re asking for the place and I she is outraged at the price. Starts going on about her place and how she and her husband want to sell and move to their house they’ve already bought in the southwest near their sons, but they need to clean out their stuff and plus she can’t stand realtors or lawyers and she’d just as soon pay someone 10k to sell it for her rather than list it.

Now I should back up to say that her property is three times as nice as ranch house in the woods – out of my ballpark, really, but even so she was practically begging me to ask what she was thinking to list it for and so I did. Then she got into all about their considerations/packing paring down she and her hubby have to do in order relocate/retire and I told her about our woes and the more we talked, we just kept looking at each other like, “maybe there’s a deal here.” But I figured I’d better tell her fair and square where we stand financially, and I asked her if she and her husband would ever consider such a thing as owner-mortgage. She did not bat an eyelash about the bankruptcy. Just smiled and said, “We will consider any offer.”

So we exchanged phone numbers and she invited me to bring my husband over to meet hers on on Monday!

Serendipitous, eh? :beer