I have been trying to find the solution to this problem for weeks. :help
In MD, we have a 30 day or so ratification period after the foreclosure sale at courthouse. After ratification period, then you go to closing. This gives time to obtain financing.
The question is, how do I obtain conventional financing on a foreclosure sale? The main obstacle is not owning the property yet. I cannot just walk in with a lender’s appraiser to appraise the property if the original owners are still inside.
Without using hard money or full cash from a HELOC, what is the solution?
- Find lenders who will lend without a full interior appraisal and will lend with a drive-by or an automated valuation model. (Having trouble finding these)
- Pay the original owner some money to allow me & the bank appraiser in
- Another solution?
Any insight would be greatly appreciated!
So, the original owners aren’t cooperating? Are they in denial? You may be trying to solve an unsolveable problem… ok, as investors NO problem is unsolveable, but maybe this is one you shouldn’t be spending too much time on if they owners are being difficult. It’s going to be tough for you to find conventional financing… this is one of those cases where cash or hard money works precisely because you don’t have the same requirements as conventional financing does. Why can’t you go the cash/hard money route?
The main reason is simply because of the high points associated with hard money. Conventional would be more advantageous.
A few people have told me they simply work out an arrangement with the original owners by offering them a cash incentive to allow access to the property and moving out gracefully. Has this worked for people?
Thanks in advance for any input.
Offer them $500 and you’ll get the U-haul and a couple of school kids to help pack.
That sounds like a win-win situation for everyone. I just hope they won’t be unreasonable.
In your purchase contract you need to allow for the ratification period AND time for you to get financing. Darin
I think the solution is to do this collectively, where buyers, realtors, contractors, investors and financiers pool in their resources and buy without the need to opbtain finance post-foreclosure. I have started something of this nature, but am unable to give any details for fear of it being deemed advertising.
That’s the problem with FC sales, you need the cash up front and you need to put it on the table before you have clear title. No conventional lender I’ve ever met will spring for a mortgage without it. I like the cash idea, and often offer $20 ($50 if needed) for a tour of the house before the sale. Surprising what a little cash will accomplish, sometimes they tell you plenty. When I buy at FC sales, I use HELOC cash, knowing I should be able to refi it out within a few weeks to months. I much prefer buying sub2, for a dollar or ten out of pocket. But those deals don’t present themselves often enough for me, which is why I’ve lain a nice stack of cash on the table for three of my last four deals, two of which even involved–gasp–Realtors. Good luck. Look into sub2s, or finding sellers willing to carry some paper.
The good thing here in MD is that most FC sales guarantee clear title. Also, a 30 day ratification period allows time for financing to be obtained. I was simply stumped as to how to get my lender’s appraiser in. For awhile I was looking for lenders that will lend without a full interior appraisal or with a drive-by. But these are hard to come by now. A few people have suggested I use the cash incentive method. Perhaps offer them money to move and leave gracefully and let my appraiser in. I hope this works smoothly. Thanks everyone for your help!