Investor · Delray Beach, FL · Member since 2014 · 16 posts · 3 votes
I found a good potential deal a few towns over from me. The bank issued a default judgement for an amount which still leaves some equity in the house, but it is set to go to auction in two weeks if the balance goes unpaid. I know that once it does, any deal that once existed will get bid up into oblivion. So I have to act now!
Homeowner is unresponsive and unwilling to sell to anyone, likely due to some clouded judgement as a result of drug use (apparently, according to neighbor I spoke to yesterday).
Is there ANYTHING I can do, speak to the bank/attorney/etc. to purchase the property ahead of auction/foreclosure?
I'm fairly certain the only thing I can do involves getting the seller to sign the deed over to me and maybe offer him some walking money to motivate. IF that's the case, I can still keep trying, but what are the documents I need? Is it just a quick "quit claim" and would that be strong enough so when I paid off this guy's foreclosure judgement I actually have rights to the house?
Thanks in advance! Hoping someone has some "ninja" moves for this one!
Investor · Pasco, WA · Member since 2010 · 27 posts · 16 votes
12y
Jeffrey,
Have you done a title search to see if there are any other liens on the property? How much equity is in the property?
As far as getting the house before the auction, the seller has to sell it to you. There are no tricks around that until the bank takes the house back.
I like your idea to get the deed to the property. One question, if you pay the default judgement will there still be loans in place on the property? Basically will you be buying Sub2? If so you should probably have them sign a power of attorney so you can deal with the loan later. Also get all the info for the loan.
Real Estate Investor · Saint Petersburg, FL · Member since 2013 · 1k+ posts · 951 votes
12y
Only the owner can sell, you can't get someone else to sell you the house.
If there's a lot of equity it will probably go 3rd party at the auction and the owner will be entitled to any overage after the bank's judgement and any other lien holders are paid.
Investor · Delray Beach, FL · Member since 2014 · 16 posts · 3 votes
12y
@Joe P. I've done the cursory search on the clerk's website, but I'm hesitant to pay for a title search for every property i'm considering....this is a good potential deal though, so it may we worth it. After all, I'm just starting out and so starting a working relationship w/ a local title company could help me work something out with them moving forward.
Any suggestions? Another question is, if in fact this goes to auction, and I want to try and bid --- do auction buyers always do full title searches for the house they're gonna bid on? Or doesn't the auction process clear out the junior liens/encumbrances etc?
Good point on the other loans against the property, if I do go Sub2 with the homeowner I'll definitely be researching that with a proper title search...
I see you're in PB county. I assumed you verified it is a 1st mtg foreclosing, right? You're thinking correct, but if the owner keeps their head in the sand, there's nothing you can do. The auction will wipe out most liens, except taxes, HOA's and code violations. If you want me to take a quick look at it I will.
Bedford, NH · Member since 2012 · 2k+ posts · 1k+ votes
12y
Don't know that I see evidence of clouded judgement. Quite the contrary, actually.
So this homeowner can do one of two things with their equity. They can let the foreclosure happen, and take the overage (the equity.) Or they can give that equity to you.
Why would they do that? Not for "walking money" that's for sure.
The only thing you can offer this homeowner, maybe, is the ability to avoid foreclosure. Which is worth a lot to some people, and nothing at all to others.
Investor · Delray Beach, FL · Member since 2014 · 16 posts · 3 votes
12y
@Richard C. I don't like to hear it, but that's absolutely correct info. thank you! But, good news is, it does turn out that they want to avoid foreclosure, so i'm walking thru the house this afternoon. They sound interested in selling.
If the walk-through goes well, is there anything wrong with getting a signed purchase agreement between myself and the owner for the last known payoff amount, JUST so I have some kind of equitable interest before paying for title search/attorney? I know it's impossible for them to sell while in default, but my goal is to tie up the property for ME, while I work with the bank to cure the default. I don't want to do all this work and have an opportunist sweep in.
I would obviously include clauses for lien search and inspection, and wouldn't pay the owner anything obviously until I worked out. Is this a good strategy to protect my interests while we work out the details?
If not, any suggestions on how to tie this up while I work out the details?
Investor · Central Valley, CA · Member since 2012 · 6k+ posts · 3k+ votes
12y
You can write as many contingencies into the purchase agreement as you want, as long as they are lawful and the seller(s) agree to them and are willing to sign. Mortgage amounts up to xxx, current and past property due taxes up to xxx, clear and marketable title subject to a title report, etc.
The owner can certainly sell while they're in default, as long everything gets paid off. When you researched the property, you should have seen the Final Judgment in the foreclosure, which sets the sale date. This has the total amount owed, through a certain date, so the pay off shouldn't be a mystery to you. If you've researched it on the clerk's site and property tax site, you've done everything the auction bidders do, but they do know what they're looking for. Any code violations that aren't recorded yet won't show up though. But don't count on working out a sub2, as the bank may not reinstate the loan with just the back payments and fees, they may require a full pay off. I realize you want to tie it up, but don't put the seller in the position of Him being tied up, if you can't follow through. It could be predatory or unenforceable. You'll also need an Authorization To release from the seller, if you want to talk to the bank. There won't be any negotiations on the pay off though. If you want a second opinion, I won't steal your deal, send me a message or email.