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Answers (7)
- Pasadenan
- Contributions:21458
Certain agents are recommending you try for a "short sale".... Short sales take a very long time and need the lender approval. If the foreclosure is already in process, really, why would the lender want to lose money going that route? The only reason lenders choose to do short sales rather than foreclosures is it costs them less. But if they already did most of the processing for the foreclosure auction, they already had those expenses that they can't recover.
The simple answer is, yes, of course you can buy from the owner that is in foreclosure to "bail them out"; but you better bring enough cash to pay for the whole thing as you likely won't get a loan since it likely won't appraise for what the seller needs to pay off all liens.
And as already mentioned, why do you want to bail the owner of a foreclosure out? Why not just wait for the auction and pay your cash there for the "as is" condition that you not fully understand until you take possession?
Or, why not wait until the bank buys it back at the auction and they put it back on the market as an REO?
If you really thought that buying right before a foreclosure auction was a way to "beat out the competition", don't you think that all the competition would already be doing that and that nothing would go to the auction?
Do the math; it rarely pays to bail out someone that needs to be foreclosed on.
The simple answer is, yes, of course you can buy from the owner that is in foreclosure to "bail them out"; but you better bring enough cash to pay for the whole thing as you likely won't get a loan since it likely won't appraise for what the seller needs to pay off all liens.
And as already mentioned, why do you want to bail the owner of a foreclosure out? Why not just wait for the auction and pay your cash there for the "as is" condition that you not fully understand until you take possession?
Or, why not wait until the bank buys it back at the auction and they put it back on the market as an REO?
If you really thought that buying right before a foreclosure auction was a way to "beat out the competition", don't you think that all the competition would already be doing that and that nothing would go to the auction?
Do the math; it rarely pays to bail out someone that needs to be foreclosed on.
- Ryan Halset, "RyanHalset"
- Contributions:730
Hmm. not sure what part of our answers the last respondent respectfully disagrees with...if we're having a conversation about whether it's worth the time...that's another topic...but the answer to the question at hand is definitely yes.
If your agent can track down the sellers and agree to short selling their house...there is an opportunity (however small it may be) that they can get the auction postponed. I've been able to successfully postpone auctions just days before the auction date & I've had success at this multiple times. I know many other agents who have been able to do this as well. It takes coordination with the trustee and the lender but it's not rocket science. In fact, only about 30% of homes scheduled for auction actually go to auction the day they are scheduled because so many get postponed (at least in my area). Could the trustee or the lender say no? Sure...nobody said it was 100% certain that they wouldn't go to auction anyways.
Short sales can be a great bargain. It doesn't always turn out this way, but I've had buyers get homes at 85% of market value or below. In my area, they only do 1 BPO (not 3). Each short sale is different and depends on a number of factors for an approved price. The seller gains because they don't have a foreclosure on their record (a foreclosure stays on their credit report for 7 years). A short sale minimizes the damage to their credit. Owners can be tracked down with a phone call, house visit, or letter. Can they always be tracked down? No. But some owners stay in the home as many as 20 days after a home is sold at auction (again, this is in my area).
So - if you really like the house, what does it hurt to go for it? Is it a long shot? Probably. A lot of investors make offers on 10 properties before they find 1 that is negotiated to a price that is acceptable to them. But is it impossible, or is there anything to legitimately disagree with? Absolutely not.
If your agent can track down the sellers and agree to short selling their house...there is an opportunity (however small it may be) that they can get the auction postponed. I've been able to successfully postpone auctions just days before the auction date & I've had success at this multiple times. I know many other agents who have been able to do this as well. It takes coordination with the trustee and the lender but it's not rocket science. In fact, only about 30% of homes scheduled for auction actually go to auction the day they are scheduled because so many get postponed (at least in my area). Could the trustee or the lender say no? Sure...nobody said it was 100% certain that they wouldn't go to auction anyways.
Short sales can be a great bargain. It doesn't always turn out this way, but I've had buyers get homes at 85% of market value or below. In my area, they only do 1 BPO (not 3). Each short sale is different and depends on a number of factors for an approved price. The seller gains because they don't have a foreclosure on their record (a foreclosure stays on their credit report for 7 years). A short sale minimizes the damage to their credit. Owners can be tracked down with a phone call, house visit, or letter. Can they always be tracked down? No. But some owners stay in the home as many as 20 days after a home is sold at auction (again, this is in my area).
So - if you really like the house, what does it hurt to go for it? Is it a long shot? Probably. A lot of investors make offers on 10 properties before they find 1 that is negotiated to a price that is acceptable to them. But is it impossible, or is there anything to legitimately disagree with? Absolutely not.
- Stephanie McCarty, "snellvilleagent"
- Contributions:521
Dear Unwirklich. I respectfully disagree with the other agents. Once a foreclosure gets to the point of being just a couple of weeks from auction date, for all practical purposes, it is too late to work with the seller to buy the house. Seller is probably no longer occupying the property. How will you find the seller? What incentive does the seller have at this point to sell the house?
Another obstacle to making your plan work is the fact that the foreclosure department and the loss mitigation (the people who work on and approve short sales) are two completely separate departments. These departments do not share files. They do not communicate. It is common for a home to foreclose while there is a pending short sale.
From the buyer's perspective - what do you have to gain by trying to maneuver this maze? Is the house really that great? Is it so unique that you can't find something comparable?
Short sale is no bargain - short sales are generally approved by lenders at fair market value. Fair market value is determined by 3 independent broker pricing opinions and a certified appraisal.
Find another house and get on with your life. It's not worth it.
Good luck.
Another obstacle to making your plan work is the fact that the foreclosure department and the loss mitigation (the people who work on and approve short sales) are two completely separate departments. These departments do not share files. They do not communicate. It is common for a home to foreclose while there is a pending short sale.
From the buyer's perspective - what do you have to gain by trying to maneuver this maze? Is the house really that great? Is it so unique that you can't find something comparable?
Short sale is no bargain - short sales are generally approved by lenders at fair market value. Fair market value is determined by 3 independent broker pricing opinions and a certified appraisal.
Find another house and get on with your life. It's not worth it.
Good luck.
- Eric Egeland, "Eric P. Egeland"
- Contributions:491
I agree with Richard,James & Ryan....get a Realtor to approach the owners & attempt to purchase it via a short sale.
- Richard Combs, "RichardMCombs"
- Contributions:186
Yes I agree with Ryan about the short sale. I have done this many times and the bank usually postpones the foreclosure.
- James Callas, "ABBAUSA"
- Contributions:958
Yes.
You absolutely need the help of a Realtor© in your area.
If you try this alone, kiss the deal goodbye now.
Since this is a rural property, you might look at a USDA loan as well, but ask your Realtor© what is the best in your situation.
Good Luck!
James Callas - Realtor®
You absolutely need the help of a Realtor© in your area.
If you try this alone, kiss the deal goodbye now.
Since this is a rural property, you might look at a USDA loan as well, but ask your Realtor© what is the best in your situation.
Good Luck!
James Callas - Realtor®
- Ryan Halset, "RyanHalset"
- Contributions:730
Yes - but the easiest way to do it is probably to work with a Realtor to convince the sellers to list the home as a short sale, quickly write up your offer & turn it in to the bank...that may get the lender to postpone the auction (there is a good chance they will if they have an offer in hand).
The owner's debt would not pass on to you...and an FHA loan would be fine using this scenario. You also may be saving the sellers from foreclosure, and helping minimize the impact on their credit by facilitating a short sale.
Good Luck!
The owner's debt would not pass on to you...and an FHA loan would be fine using this scenario. You also may be saving the sellers from foreclosure, and helping minimize the impact on their credit by facilitating a short sale.
Good Luck!
If a home is pending foreclosure and has an auction date set, can you still buy it from the owner?
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