Bank owned reverse mortgage?

[Jason Staine]

Hi BP Found a property that is bank owned though a reverse mortgage. Selling agent told me the bank is firm on the price because of federal regulations. At the listed price its not a profitable flip. Looking to flip this property listed at 109k. My numbers according to BP calculator would require a purchase price between 82k and 87k to account for reno and profit. Please share your insight on this type of bank owned property and any creative approaches to scooping deals in this situtation.

[Greg H.]

Originally posted by @Irina Belkofer:

 That's plain funny ;)

I've seen a condo with reverse mortgage @$92K for the property with market value $15-20K went to foreclosure and sold for $5K. 

There is no such thing as appraised value when it comes to sale - the property I'll be sold for whatever the highest and best offer will be received. HUD is not going to hold up the property forever. Every 30 days the price will go down unless there are enough showings to assure that the price is correct.

If your selling agent is not comfortable to present your offer for what you want - go to the listing agent or get another agent.

There is no set prices on anything - there is market to dictate the price, not HUD. Off course, if they get a buyer for the asking price, yours will be dismissed. But if they don't have any offers - they will counter yours.

 Why is it funny ?  Here is an excerpt from the guidelines:

• The most important, at least for buyers, is that the property CANNOT sell for less than the appraised value, which is the list price
• We accept offers from both Owner Occupants and Investors
• Earnest Money for investors and cash offers is a minimum 10% or $1,000, whichever is greater
• Earnest Money will be held by Sellers attorney
• 90% of the time the Seller is Fannie Mae; the other 10% it as another GSE (Government Subsidized Entity)
• Property is NOT Homepath eligible
• Property is NOT a HUD home
• There are deed restrictions for investors
• Seller WILL NOT pay closing costs
• Seller WILL NOT do any repairs
• Seller WILL NOT connect utilities
• There is a cap on what the Seller will spend on these properties; this can result in the property not being trashed out, cleaned, etc.
• Property is SOLD AS-IS, WHERE IS

After 120 days, the property will be reappraised and a price adjustment might occur.  The amount owed on the property has xero bearing on the price.  Pricing is based on the appraisal and is listed at 100% of that value