Need Advice on Offer - Pre-Foreclosure with Foundation Issues

[Andrew B.]

Hello BP Brain-trust,

I am looking for advice on a potential offer on a pre-foreclosure property. The property is listed and they need closing in about 12 days. Initially my wife and I were thinking of a live-in flip and sell in 2 years. Went and viewed the property today and it has some major structural settling, which doesn't bother me, but changes my strategy. Here are some facts:

• Outside of Denver, CO
• Listed at $299k with recent appraisal at $385k. Some comps as high as $400k.
• Balance owed is around $225k after seller fees.
• House is a total cosmetic overhaul.
• Seller accepting offers until 12pm tomorrow. I can't see anyone in their right mind coming close to making an offer between $225 and $299 due to the structural.
• Structural settling and slab movement - I have ballpark estimate from local contractor and I think this is going to scare away most of the people that were initially interested in this property. No one was really interested while we were viewing.

My new strategy is to just go with a straight fix-and-flip over 3-4 months. Hard money at 70% of cost. This would be my first, but have help with an experienced home builder as a potential partner who has some great connections.

To make my numbers work, assuming an ARV of $350k due to the property backed to a secondary artery road and some commercial properties, I would have to buy around $125k - $150k due to the cost of the structural repairs (slab jack, 18 helical piles, chimney reinforcement, etc.) and the full cosmetic repairs.

Knowing the owners need $225k to get out from under this thing, would you make the low offer of $125k now or wait to see what happens with offers and the bank then try to make an offer, assuming the property is still available via the bank? With the amount of structural repair, I don't know if a show of some money on the table now is advantageous or if I should wait it out?

Thanks in advance,

Andrew