Foreclosure that is set to be auctioned off

[Jim L.]

If a property is in foreclosure and set to be auctioned off, is it still possible to contact the owner of the property, pay off the remaining debt and obtain the property before it goes to auction?  Or once it is in foreclosure and set to be auctioned off there is no way of purchasing it unless you are at the auction. 

[Randall Alan]

Quote from @Jim L.:

If a property is in foreclosure and set to be auctioned off, is it still possible to contact the owner of the property, pay off the remaining debt and obtain the property before it goes to auction? Or once it is in foreclosure and set to be auctioned off there is no way of purchasing it unless you are at the auction.

In Florida, technically you COULD do that... but it would neglect the fact that many of the properties that go to foreclosure are there for far more reasons than the owner didn't pay their mortgage. What I mean is that many of them come with SERIOUS "people issues" - where you would never be able to pull off a buy-out with them. 

For instance - we have bought 2 foreclosure sales and ones from wholesalers where the property was about to go to foreclosure. All of them were TRAIN WRECKS! Not just the property - but also the person (usually the owner) living in them (after we bought them). It's hard to describe without sounding mean - but crazy, nuts, unable to deal with reality, armed, weird, and dying would be a few words to tell you about our experiences. The first one we bought - the guy had 10 cats, and 10 litter boxes that had not been changed in 5 years. The refrigerator quit in the kitchen so he just unplugged it with the food in it and it was there 6 months later the day we got a phone call that he had died (in the unit - after we bought it where we were renting it back to him). We didn't have to deal with the body or anything - but we did have to ultimately dispose of his estate assets because he had no relatives. We probated the estate in order to recover monies owed to us. Took 6 months and we had to LITERALLY use respirators to walk inside the house because the odor / fumes were so bad from the cats... What I left out of was that the cat urine smell was so strong that even after we pulled every bit of carpet, etc and cleaned the unit it still wreaked of cat urine. We sold the unit un-repaired to a handyman - for a profit - but it was definitely not a success compared to our normal transactions.

The next one the woman had gone through a divorce - but was (sort of) mentally handicapped by it.  Couldn't deal with reality.  We were leasing that property back to her as well - because our purchase gave them funds to be able to do that.  But did she use the money to find a new solution?  Nope - spent it on scratch off tickets and cigarettes and about a year after we bought the property we had to evict her.  She was just not capable of advocating for herself.  So there are A LOT of really sad situations out there.  

Many other properties are where people have died and who knows if they had family or whatever.  Many are represented by attorneys who know what they are doing.  Are you aware that if the property had a mortgage of say $50,000 and it sold for $150,000 at foreclosure that the estate (or even the former owner if still living) would receive the difference of the $100,000 from the sale?   Executors use that path to fund the estate.  So the thought of someone stepping in and "taking the property off their hands to avoid the foreclosure" isn't always the desired outcome.  Probate court recognizes an auction as a valid way to sell a property for the maximum value available at the time.  If you want to sell it to an individual you have to have it appraised, and the court would expect the executor to get near the appraised value to be serving the best interest of the estate - so no deals there for an investor.

So while the idea of swooping in and pulling a property out of foreclosure is an interesting one (and seems like it would work) - the likelihood of pulling it off is slim.  Not because it can't be done - it's just that you are a total outsider trying to insert yourself into someone else's life situation.  Why should they trust you?  Imagine if someone showed up at your door saying "I want to buy your property" (when your life is in total chaos - person dying, divorce, etc).  You can play it like you are the white knight... but ultimately you are more than likely looking to profit off their bad situation. My suggestion - from experience - is that It will seldom go well for you.  And as another poster mentioned - it is an all cash affair to pay off the mortgage.... no 30 days, no inspections, no contingencies.  

To do it you would need to negotiate with the owner to buy it for a price that is over the cost of the mortgage... otherwise, what would be in it for them?  Desperate people will take you up on it... and we have done it through a wholesaler where we responded to their ad... but as mentioned - ultimately we were taking advantage of someone's bad situation.  Yes, we helped them out (they made $40,000 on the deal based on the price the wholesaler offered it to us for.  We rehabbed the property and turned it for a nice profit.  But there is a dark side behind those situations.  Ultimately the owner would have faired much better if she could have sold the property herself though a realtor.  The problem was the place was in shambles and she didn't have the funds (or mental 'wherewithall') to make that happen.  

Wish you the best!

Randy