Another question - I’m not sure there’s time for my short sale offer to work out before the auction, so I’m wondering whether you think it could be an option, if the bank buys the property back at the auction, to offer them their bid price plus a small margin to take it off their hands, right after the auction? Seems to me it would save them the trouble of having to put it on the market…
Thing is, I’m not an investor (I’m interested in this house for my primary residence), and so I’m concerned about bidding at auction in case I can’t get a traditional mortgage on the place (needs some rehab, and hard money is too expensive for my circumstances). Way I see it, I would avoid that risk (my offer would be contingent on mortgage financing), and the need to secure repossession (tho I would still help the owners anyway), if I could just buy from the bank afterwards.
Of course this would only work out if the bank was the high bidder at the auction, but assuming that they are, do you think a bank would be interested in this kind of deal? If not, what would be the reasons?
ps. there is also a second mortgage on the property but I understand that gets wiped out at the auction.
Do you have a purchase contract with the current owner? If so, the bank may consider holding off on the auction if the current owner submits the purchase contract to the lender and the lender agrees to the sale. Also, depending on the amount of money it would cost to pull the home out of foreclosure, you may consider paying that amount to save the home and follow through with conventional financing. You may be able to place that amount in escrow with an attorney or title company…?? It’s worth discussing it with the current owner and lender…
If the home does not sell at auction, you may get lucky and be able to work a deal with the foreclosing lender - depends on how anal the lender is…
As far as the second, it may or may not disappear. 1st lein holders have been known to buy the 2nd on many occasions.
r/e rodeo, thanks so much for the feedback. We have decided that the short sale is no longer a possibility - the owners are not even going to authorize us to speak to the banks, and we can’t waste any more time on their agent who is doing practically nothing to make this work.
What you say about the 2nd lien is scary news for me. I had always understood it would be wiped out in an auction. Are you saying then that we could win the auction and find out the 2nd lien is still in place?! The deal would be a major negative in terms of cost-effectiveness if that was the case.
On working out a deal after the auction, you imply that it would be a question of luck rather than a likelihood - is that the case? I wouldn’t want to count on it with that level of doubt.
Further advice appreciated!
BTW, I read some stuff by a Bill Brussman saying buying after the auction is a good strategy (http://db.inman.com/bruss/columns/column.cfm?StoryId=040401BB4&Display=story, see no. 3 near the bottom of the page). But he doesn’t really explain why, particularly if the buyer has to evict the homeowners.
Getting a house after it becomes REO means the price is to high. That is why it did not go at the auction. All the suckers that buy REO properties and infor-commercial tapes, always pays more. Try to get the properties before foreclosure.
I hear you, except this would be right after the auction (hours, not days). But anyway…