How can I get a hold of the owners? Was listed then bank drilled locks yesterday...

Question

The property was listed for 130k. We went to look at it as my wife and i thought it would be a great fixer upper. They drilled the locks without telling the listing agent. Its now listed for a sheriff's sale in 3 weeks. Borrower owes like 179k on the property. Is there anything I can do before the sheriff's sale to get in the property or make an offer? I am sure the bank will probably make sure they win the auction since the borrower owes too much. I know it will likely be foreclosed on and back on the market in 6 months or so, but we don't have time to wait 6 months. We have someone ready to rent our condo that took a 18k beating in the past 6 years which was a decent percentage considering pp was 55k. Any tips? Old listing agent wasn't trying to help me so that was a dead end and so was contacting the bank reo department since they do not own the house yet.

Shaun Schwanson · Answer

Yes, someone cut the listing agents locks and replaced them. The bank claims that they do not own the property yet, but they must be protecting it until the sale? The listing agent has replied to my email and has given me some insight on the property. Its basically cosmetic, but the basement might need to be sealed as it smells "musty". It could also be that it has just been locked up for 6 months.

Apparently the listing agent has a pending offer in which the bank said they would wait and not schedule the sheriff sale. The offer is much higher than the starting bid at the auction. So, who knows? Maybe they will accept the offer and cancel the sale or maybe they want to get the property back to take advantage of their private mortgage insurance, government bailouts, and whatever other help they get for over lending.

Jon Holdman · Answer

Sorry, I shouldn't say "their property" when referring to the bank.  I mean the security interest on their loan.

Jon Holdman · Answer

I'm reading this as the owners have cancelled the listing agreement (or it expired) and have abandoned the property.  The bank has the sale scheduled a few weeks out.  They don't have possession, but they do have the right to protect their property.

All hope isn't lost.  Contact listing agent and see if she can put you in touch with anyone at the bank.  Or if you can submit an offer.  You may have to buy it sight unseen, but you will if you buy at the auction, too.  And if you wait six months for it to perk through the system and go on the MLS, you still may not get it.  And it will be in worse shape.

Ibrahim Hughes · Answer

I'm a little confused.  First you say it's scheduled for a sheriff sale in 3 weeks and then you say "the bank took it back" (understanding that unless an owner in default brought it as an REO and received funding from the same bank selling the property, the lender is not 'taking the property back' as they likely didn't own it to begin with - but that's another issue).

The first step in buying any vacant and abandoned house is to get the FACTS. Not assumptions. No guesses. Facts.  Did the bank take possession or not? And why not hire the listing agent and promise her/him 3% if she helps you buy the house?

Jon Holdman · Answer

Never, ever fall in love with a short sale, REO or other distressed property.  They will break your heart.  Go find 10 other properties worthy of offers and try for those.  You have a pretty good chance of getting one of them.  You may have to look at 100 properties, though.

Shaun Schwanson · Answer

I wish I got to see it. It was on the market for 5 months before the bank took it back and I do think it was listed as short sale status at 130k. I don't know if the bank would have accepted it thought. I also don;t know if it is underwater. The outside looks great and I did get to look in the windows into the new addition they put on which needed new carpet and some paint. It was a half ass attempt of an addition for sure. Pics show the hardwoods prob need to be stripped and refinished. Paint on most walls is necessary. Kitchen updated with cabinets, but not a counter. I wish the real estate agent would just let me know if there were any major issues in the basement. I would go to the sale and bid just to see if I could snag it. She won't make money now that its not listed so she is not helping me. My wife loved this place so I was really trying everything to figure something out, but dead ends so far. I could go see if I can see in the basement, but thats about it. Thanks for the tip though...anything that can help me is appreciated.

Ibrahim Hughes · Answer

Trust me.  If the property IS underwater the bank would rather not take it. They will likely be the sole bidder and thus reluctantly take possession of the property.

Not sure if you can do anything in 3 weeks.  Did the listing agent say whether or not the bank was cooperating with a short sale? Why didn't the property sell?

You could try and bid at the auction.  Even start your bid lower than what's owed.  You never know. The bank might be ready to take a nice haircut on it and walk away with 1/2 of what's owed.