How to approach Lis Pendens in High Income Area-Experts please chime in

Question

I'm looking to purchase in a igh income area for the school district. The average Home Price is over $400K. How would one approach the Lis Pendens in those areas? Letters? Knock on the doors? Ideally I would like to get the property sub to. I can afford to withdraw $50 to $100K from my 401K to purchase the property. How can one convince such presumably higher educated homeowners to sell me the property at a nice discount off? What are your thoughts? Should I offer to pay up the arrears / split the equity? I was preapproved for a $300K mortgage, & am paying for a subscription to a foreclosure list, but am paralyzed when it comes to taking action.

The zip is 11725.

Thanks for your replies

The zip is 11725.

Thanks for your replies

Wayne Brooks · Answer

Christine Laing A "preapproved" short sale may, or may not, really be preapproved.  This means they had a buyer, and this was the counter from the bank At THAT TIME.  A new BPO may create a revised price.  The realtor needs to state exactly how much extra in additional liens/fees the buyer needs to bring in addition to the purchase price, and place a max number in the purchase contract.  It may be a growing number, HOA fees, back property taxes etc.  Definitley structure your offer as a purchase price amount, PLUS an additional max amount to satisfy "liens/fees the shorted bank will not pay".  Crazy or not, a bank will refuse to pay $10,000 in some fees, even if you raise the price $20,000, which would net them $10,000 more.  It's because they have strict guidelines as to junior lien amount %'s they will pay, whether it makes sense or not.

Christine L. · Answer

Thx, Wayne.  I'm waiting to hear from the realtor the amount of the liens.  The properties in that area are selling for $350K+, so I dont doubt there are other offers close to the LP.  I'm re-structuring my offer per your suggestion.  It totally makes sence!  Thanks again & I'll keep you posted.

Christine L. · Answer

Also, I'm in the town next to this school district, so I'm not in a rush.  I can wiothdraw $100K from my 401K & have a pre-qual for $300K, so I should be able to do a short sale, since I'm not in a rush.  I've heard they take about 2-3 mnonths these days, & are not dragged out like before.

Christine L. · Answer

Thanks Bill & Wayne for your help!  Wayne, on Monday I put an offer in for a short sale in another good school district.  Its an "approved" short sale for $277,525 in a very nice section, with a note on the listing "Buyer to cure lein issues at closing".  Problem is, the realtor says no one has been successful in getting inside the property.  I went on a whim & put an offer in for $208K, as is, all cash, subject to clear title at closing.  (Offer was around 25% of the List Price).  The realtor got back to me with this email from the listing agent:

Subject: RE: Offer
To: (My Realtor)

Its the lowest offer I have of several offers.
we are pretty close to full price

I told him the Listing Agent is obligated to present the offer, & I'm sure the other offers had conditions.

Now in light of what you advised, Wayne     
"It will help if you have extra cash above your down payment and closing, to pay some outstanding liens/fees a shorted bank won't pay in a short sale" I'm thibking I should have taken out that condition?  But I would first have to find out what those leans amount to & add that to my initial offer, if it makes sence.  I'm emailing the realtor now to find out if he knows about those lein issues or the amount.

Thanks guys, you've open my eyes to different options!

Bill Gulley · Answer

I see, no, you don't approach a divorcing couple as a conultant or anyone else haing issues. A letter may be a good option for you to break the ice. I would not make the letter say anything about any issue but rather just say you're interested in buying if they are interested in selling.

The issue of a new investor getting involved in a loan modification or catching up payments is having the bank assure the owner, in wrting, that the loan is to be reinstated, you could lose your money getting them caught up and then the bank just saying thanks, but you're still in default. And, doing an installment deal right after such an issue can be tricky.

You have the right idea, but we can play what if forever, need to find a property that is or might be available and go with those circumstances.

A Realtor in your arae might be of use as well, look for expired listings in that area and see where that takes you.

Sounds like you're bent on getting in a school district, have you consiered renting until something comes along?

I'd use other techniques to locate a property other than foreclosures.

Might partner too to purchase and buy from a partner.

Just ideas to consider.

Be careful going the mentor route, especially one outside your area that specializes in a few things, that's often like putting a square peg in a round hole, you need on that can fit the right transaction to the circumstance so if they run a business advertising one or two ways of doing something, that may not work best. Anyway, again, I suggest working with a Realtor. Sorry, I don't mentor deals outside my area that I can touch. Good luck :)

Wayne Brooks · Answer

Christine Laing I'm not saying you don't have a good idea, but a couple of issues.
1) In most areas, 95% of the properties in foreclosure are upside down, so no equity to acquire.
2)  Once a loan has been accelerated, the banks don't have to allow "reinstatement" by catching up on arrears.  They want the full balance, so if there is equity you could buy it outright.  Most sellers with equity will look to sell for full market value.

If you're not in a rush, you'll probably do better, price wise, with a short sale rather than a regular equity sale.  It will help if you have extra cash above your down payment and closing, to pay some outstanding liens/fees a shorted bank won't pay in a short sale.  In those cases you start with a lower purchase price of course.

Christine L. · Answer

Thanks, Bill.  When you say "foreclosure issues need to be cured" do you mean that arrears have to be brought up to date?  Also, for divorce filings, wouldnt it be harder dealing with 2 disgruntled homeowners?  From what I've read on here, the best appraoch is to go in as a potential buyer, not an advisor, etc.  So, if I strike a deal to "buy" the property, how would I approach the homeowner?  For simplicity's sake, say the arrears are 5 months at $1500/month = $7,500.  The market value is $400K (given the house condition) & the loan balance is $300K.   Since there is $100K equity in the house, would it be prudent to make an offer to pay off the arrears, split the equity (offer the Homeowner $50K) & in the end get a $400K house for $350K less the $7.5K to bring the loan current?  I'm willin to pay a mentor to assist in this regard.  I have read a lot of valuable info on here but am paralyzed when it comes to taking action.  Credit & money wise I'm ready, but cant seems to get the courage or confidence to approach the homeowner.

Bill Gulley · Answer

Never used mailings to find sellers in my life. :)
I'd call them for an appointment.
Sounds like you have more experience than many.
You do realize that foreclosure issues need to be cured before some installment deal can be done and that there may be issues as the property is on the lender's radar at that point. 
If your Realtor won't get expireds for you, with you enlisting them, I'd find another Realtor. 
Might look for divorce filings as well, the don't file notices on the property.   
Good luck :)

Christine L. · Answer

Thanks Bill.  I know what a Lis Pendens is - perhaps I should have asked differently.  I wanted to know if one has the Lis Pendens list for the desired area, what method would work best?  I've read that sending out letters indicating an interest in the property, offering to take over the property sub to, offering ot pay off the arrears, etc. are methods investors have used.  I just dont know if those methods would work in the high value areas as well.  Thanks for your insight. Its much appreciated.  I googled a couple of the addresses on the List Pendens list, & some are listed for sale, others are marked "Not for Sale" on Zillow.  I dont have access to expired listings on the MLS, & tried asking my realtor but he wasnt biting.  I read some really good ideas here.  One is to cross reference the expireds from the MLS against the Lis Pendens list.  The matches would indicate "motivated" sellers.  I.E. - they have fallen behind  on their mortgage payments, have listed the home for sale on the MLS, but the house wasnt sold.  Any other ideas out there?

Bill Gulley · Answer

Les Pendens is a notice of legal action pending, it has nothing to do with searching for a property. I'd suggest you begin with the MLS, expired lisings may give you a lead to a more creative deal. In my area, sought after school districts would rarely be done on contracts as they demand is high enough to draw cash buyers, but good luck! :)

How to approach Lis Pendens in High Income Area-Experts please chime in

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