Hello All, Found this forum and have been reading for weeks. Current investor and looking for more. My question, has anyone had experience with purchasing homes from a trustee after bankruptcy has been filed ? We have several properties in my area which have remained vacant for many months and after a skip trace, I find the individual filed BK. OR has passed away.
Any suggestions on HOW i can make offers on these properties now, rather than wait for a sale or the home to be consumed by mold or broken into. I am currently looking for relatives or possible owners who have left the area to do a short sale, but am not sure as to the right direction.
Hi,
A home owned by bankrupt owners will only be sold by the trustee if there is equity in the property. If the property is upside down then the bankruptcy court will order it vacated and allow the lender to recover title through foreclosure. So the property could sit for months or a year or more before meeting the requirements for foreclosure.
A person who passed away is probate, since we don’t own these properties we are not out a dime if lenders leave them to be consumed by mold or allow them to be broken into. Right now in California, Nevada, Arizona and Florida there are large supplies of shadow properties, I can take you by a property in Arizona that has been vacant 5 years, has never been listed and last I saw it was not in the best shape.
However lenders have no choice, they can’t continue to flood markets they have substancial foreclosure inventory in because it just continues to lower the value of there own properties and de-stabalizes the market. There are ten’s of thousands or hundreds of thousands of shadow properties sitting around the country because there in markets where 100 or 500 or 1,000 or 5,000 or 10,000 additional homes placed in the market will make values collapse and de-stabalize home values.
Historically I have a general idea of how many homes are probate, bankruptcy or foreclosures but typically a bankruptcy with a property with equity will be listed immediately, probate properties may sit for a while but can not be sold until probate has closed, but typically probate properties will go to market right away if owners want to cash out or could be forceable sold to settle the diceased parties debts. Shadow inventory or foreclosure properties vary from state to state and whether the loan was originally FHA, VA or Conventional and who owns the paper now determines whether they can listen to an advanced offer even though it’s not officially on the market!
I don’t understand why some fellow investors pick the hardest properties to buy when there are typically 6m to 6.5 million residential properties change hands every year and statistically investors only participate in about 2m of these properties. It’s like missing the forest through the tree’s!
I would much rather wholesale a home and make 5% then to fight a battle I might win in 3 months, 6 months, a year or longer and the waste of time is considerable!
GR
Outstanding information and thanks for the reply. I had assumed as much and just needed confirmation as to my thought and concerns. I did not want to miss any opportunities in the market that I might be missing. Your are 100% correct that there are loads of properties available, that do not require the time and headaches associated with the Bankruptcy Courts and Probate.
Again, thanks for the great information and reply.
Happy Investing !
The information isn’t 100% accurate.
The Trustee is allowed to collect a fee from the sale of any assets in a BK case. The lender most often woudl rather pay that fee, than to deal with the length and expense of the foreclosure.
Usually the fee is 6% of the sale, which is what the lender would pay to a Realtor anyway.
Banks have to register as a creditor on the BK Case. See if you can get the contact for the bank, make the offer, and see if they will present the offer to the Trustee.
Just got 10 properties that way.
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