Hello. I have someone who is being foreclosed upon on Feb 1. I looked up her building records and found that the has a few open violations pending such as
- Illegal Conversion
- Contruction without a permit.
Should I still try to help her with a short-sale or is it going to be a waste of time?? Thank you!
These deficiencies could be in your favor as a negotiator. I really like, in fact I will try to get, city or other official notices of anything that requires money to be spent on the property. (providing it’s not something major like replacing the foundation) It helps me negotiate the short sale payoff price down.
Here’s an example.
I had a property in a city that requires POS (Point Of Sale) inspection BY the city before title transfer is allowed. This means that if the lender gets the property back at foreclosure then they must have these violations fixed BEFORE they are allowed to transfer the title into another’s name. They used to get around this by not transferring title when they reposesed the home via a foreclosure, but now there are laws in place requiring the lenders to put title in their name when they buy back at auction. (Note: I am referring to class ‘A’ violations only)
This particular property has $30,000+ worth of class ‘A’ violations alone. In actuality, I could fixed them all for about $5k. But to the bank, that was over $30k they would have had to put into this property to bring it to standards before they could resell as an REO! So this was an easy $30k deduction in my favor.
City inspections like this one can often be ‘influenced’ just as a BPO can be influenced, but not always.
GooD Luck! :beer