For you mortgage bankers...offer on property after foreclosure

[Dueller]

Just wanted to get an idea of what would be a low ball offer that's not insulting.

Here's the deal: Owner buys residential property appraised at $280K in 4/2004. Borrows $235K... Has a subprime ARM with a teaser rate. In 4/2006 rate jumps up. Owner can't afford and bank starts foreclosure. Ultiimately foreclosure is finalized in 3/2007. Loan had been non performing since 4/2006.

Lender bids in at $141K at foreclosure sale. No other bids as it was discovered that due to roofing design problem water has run down one wall that will require about $20-25K in cosmetic/structural repairs. Additional there will need to be aBOUT $10-20k in cosmetic repairs/upgrades.

The house is one of the smaller homes in a neighborhood where asking prices are in the $300K-425K range. Lender lists the house with a realtor starting out at $239K as is. Over 5 months has dropped the price to $214K as is.

Market is extremely soft in the area. Very few houses in this price range are selling. In good move in condition this house would probably sell for $225K now.

So....what would be the low ball offer you would make that might be taken seriously on an "as is" purchase where you would be taken seriously? Oh yeah...any offer will be cash with no contingencies on mortgage approval, sale of existing home, appraisal etc. Close in 30 days on less...

[the]

How much can you rent the house out for?

[Dueller]

Restrictive covenants in the neighborhood do not allow renting...must be owner occupied.

[Jims5543]

Originally Posted by the

How much can you rent the house out for?

Exactly what made me walk away from a possible investment home. Rent in area was $1200 the house was offered at $220K.

[Dueller]

OK...to give you guys an idea on the scope of the damage:



seems to be confined to this one wall



and an idea of the cosmetics required

[Dueller]

[competentone]

Forget about what the "asking prices" are for other houses in the neighborhood. What are they actually moving at?

No one is going to be "insulted" with a low offer -- it's a business, no one is "emotionally involved" with the house.

They bid $141K because that's how big of a loss they were willing to tolerate. They may have become even "more desperate" since then and want to take their "loss" before the end of the year.

Offer them $130K (or lower depending on how soft you think the market in that area is) and see what they say.

[the]

What do you intend to do with it? Fix and sell? Live in it? For how long?

[competentone]

Originally Posted by Dueller

That's $100,000 worth of "mold remediation" right there! They've been letting is sit like that for five months? All those mold spores being blown around through the a/c system all over the house?!?

You'll take it off their hands for $80K!

[Dueller]

Fix it and live in it for next 4-6 years at least.

[Dueller]

Originally Posted by competentone

That's $100,000 worth of "mold remediation" right there! They've been letting is sit like that for five months? All those mold spores being blown around through the a/c system all over the house?!?

You'll take it off their hands for $80K!

Actually the utilities have been off for 7 months

[competentone]

Actually, looking at the picture again, is that a stucco exterior?

Is is one of the re-called stucco wall systems that trapped moisture?

Mega-$$$ repair if the inside of the other walls look similar to the opened ones.

[Dueller]

Originally Posted by competentone

Actually, looking at the picture again, is that a stucco exterior?

Is is one of the re-called stucco wall systems that trapped moisture?

Mega-$$$ repair if the inside of the other walls look similar to the opened ones.

Yup...I'm trying to find out if it one of the recalled exteriors.

[competentone]

[QUOTE=Dueller;3464951]OK...to give you guys an idea on the scope of the damage:

seems to be confined to this one wall



That is serious structural damage. It is hard to say how much to repair without seeing more details, but from just that view, you could be looking at more than $20-$25K in repairs.

[Dueller]

Here's a pic of the front of the house. On the 2 story section the roof dumped water down the wall around the first floor window. Seems to be the only place this type of damage occurred.

[competentone]

Originally Posted by Dueller

Seems to be the only place this type of damage occurred.

You have to be very careful with "seems to be" when dealing with water damage.

If there was one place that poor roof/flashing work allowed water entry, there are likely to be other places the same has occurred.

[GDSOB]

Originally Posted by competentone

Forget about what the "asking prices" are for other houses in the neighborhood. What are they actually moving at?

No one is going to be "insulted" with a low offer -- it's a business, no one is "emotionally involved" with the house.

They bid $141K because that's how big of a loss they were willing to tolerate. They may have become even "more desperate" since then and want to take their "loss" before the end of the year.

Offer them $130K (or lower depending on how soft you think the market in that area is) and see what they say.

They probably bid 141K because that was were the bidding started at 2/3 appraised value...

[turbo6bar]

Dueller, I would get a good grasp of what the repairs would cost. If you cannot determine the extent of the damage, presume worst case (removal of entire side of house down to studs and rebuild).

Does it need to be remodeled to modern styling?

You're already on the right track (quick closing and all cash). If I were in your shoes, based on the after-repairs value of $225k, and repairs of $45k (it is never as cheap as you think), I would bid $125k and go up to $145k if you're prepared to stick around long-term.

There is no such thing as an insulting offer when you can back it up with cash.

Get back to the house and tear out drywall in adjacent rooms to check extent of water damage. How is the roof construction faulty?

I recently bought a fixer-upper for $180k. Countrywide serviced the loan for a sub-prime lender. It sold at foreclosure auction for ~$220k. CWC listed it for $182k, so ultimately someone further up the chain lost at least $50k+.

[GDSOB]

Originally Posted by Dueller

Actually the utilities have been off for 7 months

Run away. Now.

Look for paint and carpet deals. There will be plent of them.

Unless you are an experiences rehabber or own a mold remediation business, you have no idea what a hornets nest this is.

[turbo6bar]

I think it could be repaired for a not so great sum of money, presuming it is confined.

You have to get more info or a reliable contractor in there.