All Forum Posts by: Paul Amegatcher

Title searches are a cheap insurance compared to missing something critical. Unless you are trained as an title abstractor I will pay for the search until you know what you are doing.  I echo the advice above. A title search in my area can be done for less than $200. 

 If the mortgage servicer is still paying the taxes then it will not be a good candidate for a quiet title action.  The mere fact that they are still paying the taxes is indicative that they still have an interest in the property. This might be one of those cases where a short sale might be a better option.  For the quiet title action to work the plaintiff or lien holder will have to show signs of abandonment, which this property does not meet. 

@David Wurzel That is one of the signs I look for when I pursue a zombie foreclosure. In Ohio, the foreclosing party has 5 years to exercise the judgement after which they will need to restart the process.  Here are some other signs to look for on the property in question: Are the taxes current or delinquent?  If the taxes are current, then who has been paying them? Sometimes the owners keep paying the taxes.  Make sure the bank is not the one paying the taxes if it is current. When did the owner last make a payment to the lien holder or debt collector that may have purchased the lien?  If the property taxes are delinquent for longer than 2 years and the owner has not made a payment to the lien holder in 2+ years then I would purchase the property from them via quit claim deed and then pursue a quiet title action to get the liens released. Verify that there are no other liens attached to the property or owner prior to purchasing via quit claim deed.  As usual please consult with a real estate attorney in your area as I'm not a lawyer.

Paul

Before you make an offer I will make sure I have all the necessary information needed:

Arv, repair cost, # of bedrooms and bathrooms, sqft etc. (I usually have this info before I even view the property. County records should have all this information). Also you need to know what the best exit strategy will be for the property (ie a fix and flip or a rental)

Once I have this info I will then make an offer to the owner.  Make sure to add your wholesale fee. 

 A range that I heard was $15k-$20k including property stablization and maintenance costs. Most of my zombie properties are located in "C" class neighborhoods in Dayton OH. So the property values for fixer uppers are between $10k-$20k. It made financial sense for the banks to abandon the properties.

 Send me a pm and I can send you some info.

My biggest mistake was not marketing to the correct sellers.  I sent marketing to some C/D neighborhoods and my phone was ringing of the hook.  Also another mistake was offering too much for Properties because I wanted to have a deal to market.

You will need to contact a local title company but usually a back to back closing has no issues.  I don't see them having issues with multiple closings as long as all the funds are separated.

Please contact a real estate attorney before purchasing a zombie foreclosure. This is a complex strategy that requires the right expertise.

What is a zombie foreclosure?

I would define it as a property that has been abandoned by both the owner of record and the lien holders. How would you know if the property has been abandoned by the lien holders and the owner? The easiest way to check abandonment is to verify if the property is vacant and if the taxes are current or delinquent. If the property is vacant and the taxes show a delinquency of greater than 2 years then I would assume the lien holder, as well as the owner, have abandoned the property. Zombie foreclosures came into existence because at the bottom of the downturn banks/lien holders faced a problem that they had never encountered before. They were faced with massive foreclosures on properties that were worth less than the cost of the foreclosure process. One way to solve their burden was to write off the properties and leave them in the owner's name. This created a glut of properties that could not be bought or sold due to liens still being attached to the properties, thus creating a zombie foreclosure.

So how does an investor go about purchasing a zombie foreclosure?

Prior to purchasing a zombie property/foreclosure, you will need to perform a title search to understand what liens are attached to the property and owner. Some liens can be easily removed, where as state and federal liens are not easily removed. You will need to contact the owner of record. Once you have made contact, you will purchase the property or have them deed it to you through a quit claim deed subject to the liens. The owner needs to understand that they are still liable for the liens or delinquent mortgages attached to the property even if they have not paid the bank in years. The only time they are not personally liable for the liens is if they filed for a bankruptcy in the past and listed the lien holder as a creditor.

Once you take title to the property, you will need to file a quiet title action against any lien holders on record. This works best if the lien holders are a large bank. A quiet title action is a legal action against anyone or entity that has an interest in the zombie property. A quiet title action by definition requires the named parties to come forward to state their interest in the property. If the named parties do not come forward within the allotted time of the legal action, usually 28 days after being served, then they will lose their right to claim an interest in the property. They will also have their rights extinguished and a judge will sign an order to have the liens released.

This is a high-level strategy that requires a lot of knowledge and some cash as you will not be able to purchase these properties using financing. The beauty of this strategy is that it does not require a lot of cash. Most of the owners in my area (Dayton, OH) have sold their zombie properties for between $250 to $3000 plus the delinquent taxes. The cost of a quiet title action is between $1200-$1500 depending on which attorney you use. Most quiet title actions are won by default judgement due to the lien holders failure to respond or disclaiming their interest after being served the notice. As stated above please contact a real estate attorney before pursuing this strategy. When used correctly a zombie property can be purchased for pennies on the dollar and then the hidden equity can be released via a quiet title action. Good luck and let me know what your thoughts are in the comments section.