Investor · Lehigh Acres, FL · Member since 2015 · 39 posts · 8 votes
Hello BP Fam!!
While generating leads for buying and holding here in South Florida I always run across vacant properties that are bank owned but are not on the market. For instance, i'll be driving for dollars and run across a home that is obviously empty (tall grass, paint peeling, no one giving that TLC!) these are the properties I'm looking to buy at a discount and hold. It seems that 1/2 the time these properties are owned by a bank or some sort of institution courtesy of an LLC. I'm sure there are various reasons why the bank owns these dilapidated units. My question is... Is it worth reaching out to these banks or LLC to work out a deal? Sometimes I notice that the previous sale date might even be a couple years ago or maybe even last year, but the property is just sitting there accruing expenses..? It seems like they would want to work out a deal to get it off their back, but then again we are talking about banks, so do they generally wait to sell at auction or put in on the market? I would like to get some opinions on whether or not it is worth pursuing such properties. Thanks so much and good luck out there!
Banks will not sell properties off market. The properties have to be available to the entire public. The bank may choose different avenues to sell them...MLS, Auctions etc....but it has to be available for any member of the public to purchase.
@Mary Bodrato banks aren't landlords and they don't like to hold on to properties. Investors like to buy bank owned or Real estate owned (REO) because they can be purchased at a discounted rate.
Banks will not sell properties off market. The properties have to be available to the entire public. The bank may choose different avenues to sell them...MLS, Auctions etc....but it has to be available for any member of the public to purchase.
That explains it Russell. If the records show a bank of some sort (I see a lot of different Bank of "fill in the blank" owned properties and some are courtesy of an LLC) will they all go to some sort of auction or traditional sale? I'm trying to figure out, if it is truly bank owned, why is there a third party attached to it?
What I don't get is why it takes them so long to get these homes to market. You would think they would want to get a non-performing asset off their books immediately, but like @Troy Norwood said sometimes they sit for years without anything being done.
hello troy and all BP family. i think i have some answers for you. first let me start by painting a scenario for you. imagine you are a banker. you have just aqquirred several houses thru repossession. all range in dollars owed to your bank from $30,000 to $300,000. suddenly, the federal government has decided that the flood of foreclosures hitting the market is killing the market and they decide to put a restriction on how many any bank can put back out on the market in any given year. so, you get instructions that, of the 100 houses you have for market, you can list only 25 this year. you have 50 houses that are below the $50k level, and 50 that rise above and way above the $50k level. which ones are you going to market??? thats right, all the ones that owe you the most. the others? well, i suppose those will have to sit and wait............. for years!!!!! this actually happened with the obama administration years ago.
these are what you are finding, troy. these houses are less than desirable and the bank, well frankly, " has bigger fish to fry". so these houses sit and sit and sit. get run down, and pretty soon, when the bank wakes up and realizes they have thousands of dollars in carrying costs invested in this house, they discover that they will never get anywhere near the amount that they have invested in the house back to them, so they " drop" the house. thats right, they write it off. they stop paying someone to check on it every 2 weeks, they stop paying someone to mow the lawn, etc. and they stop paying the taxes.
my advice to you, call and ask the bank if they have " released the lien or mortgage" back to the original owner. some banks will tell you, others will not. then, call the local tax authority. ask how many years ago the last taxes were paid on the house and who paid them. if it was a bank, and they stopped paying the taxes, well, there is your first sign that the bank has dropped the house. they aren't going to keep paying the taxes on a house that they no longer want, are they?
if you find one of these, the last known owner now owns the house again, free and clear. go to the register of deeds and records and GET A COPY OF THAT RELEASE OF LIEN". do some research and find that owner. chances are, they are living in some dingy dirty apartment really close by.
i personally have done this 2 times. one house, i gave the owner $2000 for it and assumed the $3000 owed in back taxes. i sold that place 2 days later for an $8000 profit. the second house, i gave the owner $2250 for it and assumed $4700 in back taxes. i am currently rehabbing that place and will make a profit.
if you find a house that the bank still owns, bring it to their attention. it may be literally sitting on someones desk, forgotten about. tell them that you want to purchase it right away before it becomes so delapidated that no one will make any money on it, including the bank. you might be surprised how fast they will work with you.
get working, you have some homework to do....... good luck to you
Thank you for your detailed post @Mark Elliott. If I find a property, and it turns out to be bank owned, I just move on to the next one. I always thought that I couldn't do anything with it until the bank put it on the market. I will revisit those properties, and try your stategy
keep in mind my friends. not all properties that are in a sad state of affairs will work out this way. some banks just simply take their time getting things back out onto the market. each house is a different deal. the banks blame the courts for the mess, the courts blame the banks. some banks will never drop their properties simply because they have money invested in them. the two houses i have bought like this were pretty close together in time, as well as location. but i have been struggling to find another one since. it has been about 2 years since i have bought one like this. i have found one recently that i would love to get my hands on. i have even found the old owner, but i cannot get the guy to budge on selling it even though i know he doesn't want it. some people get really skittish with things like this. the one house i bought, it took me over 6 months to talk the guy into selling it to me. patience is the key here. if the bank has already placed their name on as the owner, legally, with the local authority, chances are they are not going to drop it. even if they forgave the mortgage, they still own it. you have to find one that is behind in taxes and still has the original owners name on it as owner. then look for a release of lien from the bank. the bank may not file this with the local authority. you have to get the bank to admit that they have dropped it from their books. thats hard to do sometimes. i am working on one right now that i am sure the bank has dropped it, but they will not admit it to me. it has been sold from one bank to another, to another, and so on. i literally have a paper from the court showing that one bank sold it to another, but i cannot get bank #2 to tell me that they own it. they claim to be just the trustee. bank #2 filed the starter paperwork for foreclosure over 3 years ago, and have done nothing since. 3 years of back taxes on the place, no one takes care of it and even their lawyer told me that the case is closed. but the bank won't tell me that they dropped it. patience and persistance works here guys. i will get it, and so will you. just keep working at it
Something that you almost never saw 2-3 years ago and is quite common now is an REO that has been rehabbed by the bank. It appears that they found that rather than give them away, they can do a little work on the place and flip it, possibly even make something on a bad investment.
