How would YOU tackle this foreclosure deal?

[Sam Alpha]

Hello,

I will try and keep this as short, but detailed as possible. 

My experience with RE is at best limited to the BP podcasts and a little reading material, as I have only decided a few months back, that I would like to enter into this field.

I was out on a run today and happened to go through a sub-division.  I stopped briefly to hold a conversation with an older gentleman and one thing led to another, with him disclosing that his home was to be auctioned in January 2015.

This led me to investigate a little further and this is what I got.

Outstanding debt: 80K.  However, note that with auction charges, attorney fees etc, the bank (which is actually a Govt. agency) wants to settle for $100K.

Repairs: The home needs a bit of work.  I did not get enough information as he had to leave.  However, he seemed like a reasonably trustworthy person and actually was the one that disclosed to me that the home would need repairs worth $30K.  This figure would apply to the work being contracted out and I plan to get some sort of an inspection done.  

Other Expenses: If the home gets sold at the auction, he gets nothing.  I asked him what he thought would be a fair amount, if I had to pay him to get this deal closed before it went to the auction.  He told me that is he got $10K, he would be ecstatic!.  I acknowledged his response, without portraying any type of commitment.  In saying that, this gentleman has had the need to let his house go due to a very sad situation.  If I had to pay him this amount, I would still end up getting a decent deal and so will very likely not negotiate him down, as I can see that money lifting a huge burden off him.

Property Value: Running comps to what has sold recently (3 months) and what is on sale as of now, the average price/sq. ft. is: $116. This is a 1637 sq.ft home and so that would appraise it at: $189,892 (ARV).

Property Details: Built in 1988, 3/2.5, 2 car garage, 1637 sq. ft., single family home.  The home is within a sub-division, which is situated in a very high demand area due to good schools, low crime and a middle class, young family type demographic.

Calculations:

Bank Pay-off: $100K. I plan to negotiate this down with them, as they will be saving on costs to take the property to the auction and on time value as well.

Repair Cost: $30K

Payment to Owner: $10K

Closing Cost + Other Expenses: $4K

Total: $144K (Market Value: $189K; Savings: $45K)

Since I have not done any deals, how can I go about making this a successful one.

I thank you in advance for your opinions, guidance and suggestions.  From a newbie that wants to dip that first toe in the water, it is all very much appreciated.

Regards,

Sam

NOTE: I have other questions connected to this property that I will post tomorrow in the appropriate sections.  I will post the link here (if it allows me to edit the post) or in the comments section.  Alternatively, please find the posts via my profile.

[Sam Alpha]

Originally posted by @Jay Hinrichs:

 Don't count on negotiating the bank down.. if this goes to auction it will probably sell 3P with that kind of spread and quality area.

Jay, I am on the wire on this.  If I ask, I could potentially miss out on the deal, but if the offer gets accepted, then a good deal just became a great deal.  If I don't, I will stay with that "what if" thought for a while.

This is just my amateur opinion and your thoughts on this would hold good value. What do you say Jay?

Also, was 3P (above) a typo, or does it stand for something?