Creative finance to help owner avoid foreclosure auction in less than 72 hours

[Sean Collins]

We have property owner that contacted us about a SFH in Tucson, AZ, looking for help to avoid a foreclosure auction coming on Wed, June 21. The outstanding mortgage is 3.5%. We estimate the market resale value to be at minimum $400,000 without any additional work. The property has a Payoff Statement for $286,000, a Reinstatement Statement for $74,000, and an outstanding $21,000 probate debt encumbrance. The owner has a tenant on the property under a lease agreement at $1100/mo, and the monthly PITI is $1500.

The owner of record is actually deceased and we are in talks with the widower, who is also the executor of the estate. The widower's name is nowhere on the Deed, but Arizona is a community-property state, so widower is the sole heir.

Owner wants to get out without foreclosure.  He would also like for his current tenant/friend to have the option to buy the property sometime after the auction date, if they can get approved financing.  He also says he has belongings on the property he would like to keep in storage for some period of time.

OUR GOAL:  We want to obtain this property with creative financing.

(1) We take over the property on a Subject To deal.  Pay the Reinstatement balance + probate debt (about $95000 total) and start paying the mortgage payments. 

(2) We put the tenant under a new 1 year lease agreement, with an option for them to buy the property for an amount that covers the remaining mortgage plus our funds and an additional consideration for our risk, within 1 year.  At the end of that year, if they are unable to finance the purchase, then they move out and we do as we wish with the property.

QUESTIONS:

- We have heard that we can get the auction postponed if we get the owner to sign a purchase agreement and we provide proof-of-funds.  But, I think that is more appropriate for a wholesale deal, and it might even prevent us from being able to complete a Subject To deal.  Will a signed purchase agreement prevent a Subject To deal?

- Is there a good likelihood of being able to complete a Subject To deal in this short timeframe?

- Is there a way to get the auction postponed that would still allow for a creative finance deal?