I was wondering what is the effect of listing a property with a real estate agent when the property is in foreclosure.
I know of a property that is in foreclosure and was recently listed with a real estate agent. I am interested in the property but won’t pay the what the agent has it listed for as I know the property is encumbered with a second and possibly a third. I have approached the seller with a short sale offer without any response. I was considering approaching the Trustee who represents the Lender and seeing if they would be interested in doing a short sale.
This property was purchased by an investor two years ago and leased back to the home owner. The purchase/lease back was supposed to help the owner by giving them time to get their finances in order. The property was managed by a group of individuals who apparently handled it badly and the house fell into foreclosure. It was bailed out and is now back in foreclosure. The information I have indicates that this property is about 8 to 10 months behind on payments. No Trustee Sale date has been listed and I am curious about what impact listing a property on the open market would do to a foreclosure proceeding. I know laws are different in every state but there always seems to be some similarities between them.
Any insight anyone would have on this would be greatly appreciated. :help
Hi PhoenixCom,
The only way to purchase this property (based on the information you’ve listed here) is to short sale it…getting the first, second and third lienholders to accept a lower amount than owed.
In the absence of that (and based on their lack of response to you, it looks like there will be an absence of that), your best bet will be to allow it to go the foreclosure auction, get foreclosed on, then pick it up as an REO. At the foreclosure auction, the second and third liens will fall off, leaving only the first.
In this investing environment, it’s possible (and likely) that you’ll be able to buy the property for less than the bank is owed.
Ultimately if you can’t get it at a price that allows you to work the exit strategy you’re planning, time to move to the next deal.
Take care,
Stacy K
Thanks for your input NO Lights. I did get some additional information from the trustee when I inquired about buying the note from the first lien holder. Seems that a subordinate lien holder filed bankruptcy which has halted the foreclosure.
Since this is considered by both note holders as a non performing loan it would appear that I may be able to purchase the notes from than and proceed with the foreclosure on my own. I have been working with the bankruptcy attorney to get permission from the court to short sale at least the second. 1st Lien holder won’t accept anything but full amount on their lien. If the second accepts the short sale and the court approves I can still pull this off.
I appreciate the advice. And I think this is still a doable deal. If not than you are right time to move on to the next one. Thanks again for your response. Much appreciated.
Hi Phoenix Com,
Sounds like you have a fantastic opportunity to have a great learning experience (and an interesting one)!
I hope your deal goes great! If not, the next one is just waiting for you!
Good luck!
Stacy K.
The effect that a listing has on a pre-foreclosure, if the agent is doing their job, is
A) it gets the property sold, the liens paid and the seller out of trouble.
OR
B) it proves to the lender(s) that the property will not sell for the amount owed and opens up the shortsale even better.
I think that you are pursuing this all wrong. You’re talking to lenders/trustees/etc on the property, all of which should NOT be telling you ANYTHING at this point unless you have a written authorization to do so from the seller of the property, finding out what they MAY do IF they actually get the property back.
Shortcut the process. If the property is listed, simply go talk to the agent. Again, if they are doing their job, they are already aware of the situation, and have already made arrangements with the lender(s) concerning the sale of the property. If not, then YOU are aware of the situation. Inform the agent and have the agent do the legwork on the thing to get the deal done.
Raj