All Forum Posts by: Jessica Hood

I am highly interested in bidding on properties at live sheriff auctions.  I am attempting to figure out how to get financing for this.  I have an awesome mortgage broker who has done my last 3 flip loans for me.  But those properties were easier to obtain.  Sheriff auctions have more complications.

My lender feels confident that he can obtain financing quickly enough to meet the deadlines set forth by the sheriff.  I also have a backup funding plan through Patch of Land.  I've been told by the county that it is typically 30 days from bid to confirmation and then 30 more days remaining to pay the full balance.  Has anyone successfully gotten through this within the required time frames?  And has anyone exceeded the time frame and what happened?

The next hurdle is obtaining a lender ordered appraisal.  Most of these properties are inaccessible or have tenants in them.  I have heard of some having been previously listed by an agent and still having a lockbox on them, thus allowing people inside.  I imagine that is not often.  So the question is, how do people get over this hurdle to get the appraisal done?  

I had talked to sheriff staff about trying to access properties once you reach the "confirmation" point in the process.  To which, you are officially in contract and the previous owner can no longer redeem the property.  But technically, you are still not the owner yet because you have not paid in full.  She hesitated for a moment and recommended I speak with a real estate attorney about it.  She did not come right out and tell me I could not access the property. Her hesitation made me think there may be some angle to work there. Does anyone know anything about this?

Thanks in advance!

@Darrin Wesenberg How did this turn out for your buyer?  Were you able to get the appraisal/inspection the lender needed and did you get funded in time.  I am also researching the same route.

@Russell Gronsky  Looks like I got lucky!  The appraisal came in at exactly what we needed it to.  I am under the impression that happened because of the information the realtors provided to the appraiser.  Based on my conversations with my agent.  :) 

@Russell Gronsky

I completely understand and agree about trying to avoid FHA. We knew that from the start and we were hoping for conventional. We tried to hold out an extra day by calling for highest and best from all who had looked at the house. We had multiple offers and ALL were FHA. Ugh! We were on a tight time frame due to trying to close on another property, so we bit the bullet and took the highest FHA offer. I am confident that the home will appraise at least for what I was initially asking. If it appraises for the full offer, I am going to be ecstatic! I am not holding my breath on that though. As long as the appraisal does not come in below $170k, I am ok with that. If it does, based on research, I won't agree to it. It would be too low and I would demand a new appraisal. At that point, I would toss out the whole deal and look for a new buyer. To me, that would just mean that appraiser did a poor job and I won't stand for it.

I am glad that you were able to get everyone to agree to a new appraisal.  I will be curious to know how it pans out.

If I can give you any advice, always follow your intuition.  You mentioned your agent seemed discouraged about contesting the appraisal based on their past experience.  If you truly believe, based on facts, that you are entitled to more or were treated unfairly... go for it.  I have had a lot of people try to tell me that I can't or should not do things and I can't tell you how many times I have proved them wrong.  Better to know you tried and failed than to wonder what if.  

I am following this post.  I am somewhat new to this process myself and wanted to throw out some tidbits of information.

From a buyer's end, I had real problems with an appraiser in an FHA deal. The appraiser was super slow to follow through. Then the appraisal was just horrible. The value was ridiculously low and poorly put together. It was so bad that the mortgage company agreed to throw it out. But it wasn't an immediate toss out the window. I had to show them why they needed to chuck it. The following appraisal was right on target and worked perfectly.

Now I am in contract to sell that same property and am extremely nervous about getting another low-ball appraisal.  

I listed the house for $170k, per my agent's advice. We had numerous offers within 48 hours, all the way up to $193k! We took that offer from an FHA buyer. We hoped for conventional, but all were FHA.

This house is one of the nicest in the area, but good comps are few and far between.  The comps that are here are not similar enough to make sense.

As others mentioned, my agent said she worked with the buyer's agent to gather comps to give to the appraiser.  I have been told that a lot of appraisers don't do a good job of finding comps and you suffer because of it.  I think having a good agent to help with this is important.  

I also left out a list of all of the improvements with dates when the appraiser came.  He/she took the list with them, so I think that may have helped.  Hopefully.

I think appraisals are unfair, personally.  It is just one person's opinion and they can vary wildly.

I hope it works out for you... and me!  :)

@Frank S. I just recently bought a Ford Fusion Hybrid.  It is part of my goals and serves me extremely well on gas mileage for the amount of driving I do.  I do not want to get rid of it.

I cannot just pay the cards off, as FHA requires proof that they are paid and closed.

I already have FICO and report monitoring with MyFICO.  I know what my scores are.  I have been watching them closely.  I do not want to damage them.  

I have considered the interest rates as well, but the priority here is making sure my DTI falls in line and that I am not killed on capital gains costs. Paying off the car will dramatically reduce the monthly financial burden as well. The goal is to have the car and loans all paid off in the near future anyway.

Thanks for the info!

I have not lived in the property for at least 2 years, which is the requirement for that exception.

There are a lot of different ways to get started.  It varies for everyone.  I am certainly no expert and somewhat new to the game myself.  However, I have been overcoming the hurdles of no capital by being creative.  I actually just wrote a bit about how I did that here:

https://www.biggerpockets.com/forums/522/topics/31...

From what I have learned there are a lot of ways to get creative about financing.  What I hear most is to look into private lenders.  That tends to be family and friends that can loan you the down payment.  For me, I don't have that option.  

I just read last night that you can use what they call Option to Purchase contracts to your benefit.  The seller is willing to work out their own installment agreement with you that will allow you to flip the property and then resell it.  You can set it up so that any increase in property value goes to you and not the current owner.  I had never heard of that before and thought it was an interesting "outside the box" concept.

I also did sort of a fundraiser/contest once where I offered my web development skills (a free website) as a prize for entry.  I raised a good deal of money for a down payment that way.

@JD Martin Thanks for the info! I did read the it is important to require pre-approvals before showings when listing as FSBO. And one of my first thoughts was about my safety. All great points. I had also wondered about the extra protection of having the realtor.

I like the idea of asking the agent for a reduced fee.  I do have an agent I have worked with before.  I spoke with him recently and he told me they are having a really hard time finding houses to sell.  He seemed ecstatic that I was contacting him.

I am about to list my current home for sale.  I am in contract on another property.  I have about $50k to $60k in equity on the current property.  I would like to roll half of that equity into the new property and use the remaining part to pay off my car loan of $25k, thus reducing my debt to income ratio.

I know that if you invest your equity into real estate that you do not have to pay capital gains tax on it.  What I do not know is if I roll part of that into my car, is it considered a tax free investment as well?  Or does that only apply to real estate investments?

The lender wants me to pay off one of my credit cards with a $5k balance and a $10k limit, plus close the account. FHA requires proof that the account is closed. I only have one other credit card of $2k. I suggested paying off the auto loan instead, because I feel like closing my credit card account will only hurt my credit score and eliminate established credit that I worked so hard for. You have the best credit score by having about 2 credit cards with low credit utilization. The length of time your accounts have been open also is important. By closing that card, I wipe out part of my credit history, reduce my available credit to debt ratio, and would then only have one credit line.

Paying off the credit card instead of the auto loan means several other things.  Less to potential cost of capital gains tax and more money to roll into the property.

I do realize that paying off the auto loan also has a negative impact on my credit, but I don't think it is as severe.

So, I am trying to figure out the best plan of action.  Pay off the credit card or the auto loan?  And how does capital gains tax play a roll in it?

Thanks!