A lady approached me about bying her house that is about to go into foreclosure in less than 30 days. She owes $165,000 I would like to purchase the house for 65,000-70,000. I would like to flip it. Can I buy this house for that amount even though she owes more on her mortgage?
2006-10-30 14:42:45 · 13 answers · asked by A I 1 in Business & Finance ➔ Renting & Real Estate
If it is in the stages of foreclosure and she sells it for less than what she owes on it, the bank can go after the home and put a lien on it, which means that you would not be able to resell it.
It sounds like a very risky situation for you and I would ask why she's willing to sell for less than what she owes.
2006-10-30 14:52:06 · answer #1 · answered by Anonymous · 0⤊ 0⤋
Forclosure is the process that the lender initiates when a loan is not being repaid to turn the collateral for that loan (in this case the house) into cash to repay the debt. The bank won't be satisfied until they get their money back or own the title to the property. If she owes $165,000, that means that the bank will accept nothing short of $165,000 if they can possibly help it. Most likely, she is trying to sell you her equity (the money she's already paid to the bank).
The problem with buying her equity is that you will own equity in a house that is 30 days from foreclosure. The property will still go up for auction and any money over the $165k that the bank bids will go to you and the lawyer who cries out the auction. So, unless the final bid will be ($165k + $70k ) $235,000, you should walk away.
2006-11-02 06:23:58 · answer #2 · answered by binary_spider 1 · 0⤊ 0⤋
I'm not sure of the laws in your area, but two possible options are:
1. Contact the bank and arrange a short sale...this means the bank takes less than is owed. Sell them on the idea that they won't have to foreclose or have yet another foreclosed property on their books....I'm positive this wouldn't be the only one.
2. Buy the home from the owner "subject to" the existing financing. You catch up all the back payments due and the make the payments from there on out. She will still be listed as the owner and only your good morals will ensure that the payments get made. If the bank finds out, they can call the mortgage due using the "Due on Sale" clause so make sure you can refinance in a hurry.
Again, laws vary by state so check with an attorney or at the very least an experienced real estate investor in your area.
2006-10-31 00:46:28 · answer #3 · answered by Anonymous · 0⤊ 0⤋
This is called a short sale and needs to be negotiated directly with the leinholder rather than the current owner of the house. Only they can decide what amount would be acceptable to release the mortgage on the house.
May times banks will do this, but alot depends on how much the outstanding mortgage is and if there is a 2nd mortgge, which would mean a second leinholder to negotiate with. Oftentimes in this scenario, the bank will pay a fee to a Realtor to give them a market value of the home in it's current condition to determine if the short sale is worthwhile or not. There is lot of time involved in this usually, but it can be well worth it. I have a friend who is negotiating to pay 10K for a home worth about 80K and in need of about 20K in rehab. Good luck!
2006-10-31 04:13:32 · answer #4 · answered by julsells 2 · 0⤊ 0⤋
You will have to wait until the house is foreclosed on to get it for less than $165,000. The mortgage company will bid that amount at the foreclosure auction. They will probably sell it for less after they apparaise it again. It is unlikely they will sell it for less than 70% of the mortgage amount.
If she is extremely late and the mortgage company is not to big they may sell you the mortgage at a discount. If you can negotiate a discounted price you will have to foreclose on the lady.
2006-10-30 14:54:22 · answer #5 · answered by David H 1 · 1⤊ 0⤋
No, she won't take less than what she's is owed. If the bank still doesn't get back what is owned then it will still go into foreclsoure or you will still be responsible for the balance.
If you would like to find another pre-foreclosure, there are sites that give you all the info you need.
2006-10-31 01:01:17 · answer #6 · answered by Anonymous · 0⤊ 0⤋
The real owner (the bank, lender, mortgage holder) will want the balance due, unless someone has put some LSD in their drinking water. Even then the review process and the computers would pick up on the discrepancy. If she is willing to still pay a $100K and let you have the place for kicking in the extra $65, . . . OK, ya , that is going to happen . . .
2006-10-30 14:54:34 · answer #7 · answered by kate 7 · 0⤊ 0⤋
my understanding of foreclosure is she has 30 days to pay the morgage if she does not the finance company will own it - bad situation i would steer clear as its like buying a car that still has money owing on it - if you buy it and the seller does not pay the balance then the finace company still own that car and you are left out of pocket and without a car - in your instance a house and you would be down $65k .....wait till they foreclose and then you may pick it up cheaper at auction or find out who her lender is and talk to them ..this would be the best option as they would be able to guide you if you were to buy direct off her ...sounds like a scam....
2006-10-30 15:12:12 · answer #8 · answered by pomkathynt 1 · 0⤊ 0⤋
I'm assuming the house is worth less than 165k. You'll need to do a short sale. The lady still owns the house, so you'll need her permission to contact the lender and negotiate a short sale.
Regards
2006-10-30 15:34:38 · answer #9 · answered by Anonymous · 0⤊ 0⤋
It smells like a scam. If it goes to foreclosure the bank will own it, not you. RU sure she actually owns it?
2006-10-30 14:51:53 · answer #10 · answered by Steve R 6 · 0⤊ 0⤋