the house I am renting is going through foreclosure

billwagnon · 08-17-2010, 09:15 AM

I've been sending rent payments to the bank for about six months. The bank just called to see if I am still interested in buying the house. I am.

The bank said on Thursday the property goes to the courthouse, and the bank is going to bid on the house in order to recoup some of their investment. The bank will then offer the house to me.

The mortgage with the rental company was about $130k. I offered them $70k a few months ago when they asked, then they said "well we don't own the house yet."

The bank is sending appraisers over today to take pictures.

How do I get in on the bidding? Do I have to have the cash amount for the auction?

I am already pre-approved for a mortgage through a different bank do I just need to show up with the pre-approval notice?

Given the amount of the outstanding mortgage what will the bank bid? I read that banks lose $40k-$50k on every foreclosure. Will the bank only "earn" the difference between what they successfully bid for the property and what I end up paying the bank if I buy it back from them?

billwagnon · 08-17-2010, 09:19 AM

just found this -

Quote:

The opening bid at the auction is based on the total amount owed to the foreclosing lender and may include fees incurred because of the foreclosure proceedings. If no one bids above that amount, the foreclosing lender will take possession of the property. It’s important to know this amount so you can determine if the auction represents a potential bargain purchase when the opening bid is compared to the property’s market value.

there is no way anyone would bid the full amount on the property, so it looks like the bank will take it

vash · vash's Garage

oh crapp.. you paid 6 months rent that you didnt have to!

good luck..i heard buying a foreclosure is either really easy, or really difficult..hope your's goes easy.

billwagnon · 08-17-2010, 09:26 AM

I had a lease agreement and I like where I live. Also I didn't want to be evicted or anything because my daughter is in high school and I need to stay in the school district.

Racerbvd · Racerbvd's Garage

Quote:

Originally Posted by billwagnon

just found this -

there is no way anyone would bid the full amount on the property, so it looks like the bank will take it

Yes, I went to bit on one of these not long ago, you need to have the funds secured. Now, the bad new, the bank will have a set amount that they won't take less than, and there is a very good chance it won't be much less than what is owed. Sure, if no one else bids, the banks buy back the property for $100, but if there is a bidder, it may be 95% of what is owed, but if the bank doesn't show, you have a better chance. Remember, tax money went to banks to pay for all the foreclosures, so they are double dipping, good for them, bad for those looking for investment property. Good luck with the purchase. The good thing about paying rent payments to the bank is that is shows that you are a good risk, and you should be able to negotiate an "As-Is" price and save the bank the trouble of getting it ready to sell & finding a buyer..

Zeke · 08-17-2010, 11:55 AM

I think you should take what time you have before the auction to learn all there is to know. Maybe the Nolo Press has something for you.

I don't think a Realtor will help you much at this point, but if the bank turns the property over to one, definitely get your own representative. It won't cost you a dime at that point. Look for the best.

Joe Bob · Joe Bob's Garage

Get a broker to negotiate for you.....do a short sale.

Zeke · 08-17-2010, 01:30 PM

How can he get a broker to work for him? He doesn't own the property. A broker/agent might represent him for a fee, but a bigger fee awaits if the property gets listed. It costs the buyer nothing.

And, if he did pay a broker, what if the deal didn't go down? Ya think you as a broker would represent a buyer w/o a guarantee?

Ya think you as a buyer you would guarantee a fee to a broker on speculation?

His best bet would be to have a friend in the biz, but then again, we know how those deals work.

Joe Bob · Joe Bob's Garage

You work with the original owner, both your interests are the same.....

Zeke · 08-17-2010, 02:05 PM

OK, that's cool. He staves off the foreclosure with a negotiation. I still don't see where the broker is gonna get his.

A little help? Not necessarily for me, it's not my thread.

Eric Coffey · 08-17-2010, 04:10 PM

Most banks require a full short-sale package (financial/tax statements, hardship letter, etc.) from the owner, an executed listing agreement, AND an actual purchase offer to suspend/extend a trustee's auction. Seeing as the house is being auctioned this Thursday, a short-sale is highly unlikely. However, if you can get the seller to cooperate, and get everything in to the bank at least a day prior (like by tomorrow), you may have a chance (depends on the bank & trustee). Just keep in mind that the bank will order their own appraisal/BPO's to determine market value. So, if it comps much higher than the $70k you offered, they will reject/counter your offer. Just do your homework, as you might even get it for less than you originally thought as well. Good luck!

fireant911 · 08-17-2010, 06:47 PM

billwagnon,
We recently purchased a foreclosure. Patience is the key (plus some incredible timing and luck). The bank, of course, needs to move the property and wants to minimize any losses. My understanding of the true 'foreclosure price' is between 20 and 30% less of the asking price... yes, I know that there are some incredible deals out there but overall this is probably more realistic. We offered 28% less than the asking price and our bid was accepted. Be aware that the right of redemption applies and in our case that was almost 2-1/2 times what we paid - this has since passed (in July) therefore no worries in that arena. I would not recommend going the short-sale route as this transaction could be in limbo for a considerable amout of time. Juggling two households is difficult for me (I live and work in one city and my wife is attending medical school in another - thus we are quite poor) but it is doable with one income. There is not doubt that we cannot double our investment in the second home. My recommendations are do not skimp on an inspection and offer a realistic price if you are truly interested.

billwagnon · 08-19-2010, 10:39 AM

thanks guys

the bank lady told me a few months ago that the discount is typically 20-30% of the outstanding mortgage, which would be fine with me. I low-balled it but it didn't matter anyway because the bank didn't own it yet.

that bank lady is gone now, she called me after she and others at the bank for 3-5 years were terminated and replaced by "the regulators".