Foreclosure in probate

[Jay Mitiguy]

Hey there BP,

I'm actively pursuing a property that is in probate but the bank has begun the foreclosure process as the previous owner passed shortly after not paying her mortgage and taxes for nearly 10 months. My question is, should I wait to see if the bank forecloses then make an offer, or work with the property admin now to come to an agreement. 

The property is about 2.5 acres and has two SFRs on it, both in need of some repairs. The mortgage balance is $45,000 plus about $5,000 for the attorney's fees because of the foreclosure process. The estate admin also mentioned that there are other creditors owed about $20,000 but hasn't given me any other details as to who they are and what the debt is for. He is asking $62,000 and the ARV on the main house is about $100,000. I'm estimating the secondary building to be worth $75,000+ if the parcel could be split and sold as two pieces. I also have the option to do lighter repairs and rent both out if needed. The rent was covering the debt service + expenses but not cash flowing positively.

Any insight would be greatly appreciated. Oh and I forgot to mention that this is my first potential investment property.

Thanks,

Jay

[Dave Metsker]

If the value is about $175,000, and you can get it from the estate for $62,000, get a contract signed TODAY.  It will take 30 to 120 days for the sale to close, giving you time to line up a buyer for a flip, or to get hard money financing.  As you have presented it, if the administrator is willing to sell the houses and land for $62,000, the other debts are not your concern.  The estate may have other cash assets, to make up for any shortage from the sale of the property.