All Forum Posts by: Dustin DuFault

Thanks for the encouragement @Chad U. !!

I will definitely keep you posted as things progress. I have consulted my real estate attorney, and he seemed to be as surprised by the circumstances as I was. I'm wondering about posting on here now that eventual litigation seems necessary.

I am definitely interested in your referral for a RE attorney. I do trust mine, but I will probably get a couple eyes on this before I recalculate my strategy. Here is another interesting detail for the group. I had an earlier contract on this home that fell through (VA financing). By my memory we already had a title commitment on that deal. I went back through my emails and found one from the closing agent that stated we had a title commitment which correctly noticed a tax lien on the property, but mentioned nothing of this situation... so this escaped even a title company!! I do not have a copy of the title commitment itself, though, so it was possibly an oversight by the closing agent. I'm trying to calculate a way to get my hands on that commitment without raising any interest in why I was getting it after the fact...

I'm still shocked that I haven't heard any big bewares of this issue in the past. You hear all manner of warnings to watch out for senior leans but nothing about 'watch out for a lender with both a senior and junior lean who doesn't sue itself in the foreclosure auction' warnings anywhere. Is this a widely known issue?? 

Just trying to make this point multiple times as a warning to others on BP. I researched foreclosure auctions for long while before jumping in and had never heard of this issue before now!!!

Just want to re-frame my situation so that there isn't any confusion if anyone else takes a look at this and wants to respond... in my situation, it was the senior lien that was foreclosed, which is what I bid on and won. The oddity is that the same bank had a junior lien on the property and didn't list themselves as defendant in the senior lien foreclosure suit. It's the question of validity of their junior lien which my title agent says clouds my title.

Thanks guys. As you can imagine my mind is swimming at the moment with this.

Just to make sure I'm following (I'm slow, obviously :P ) ...

Even though the 'normal practice' is to list the junior lien holders on the foreclosure action, since this was not done in this instance, then the junior lien persists???

I'm sure if I hire a lawyer (which I will do shortly) they will make the argument that 'standard practices' were not followed... but I'm trying to gauge whether that would be a meritless argument or not? That seems to be what you're saying, correct?

I've actually owned the property for nearly 2 years at this point. I'm trying to weigh my options and am wondering if I need to change strategies and rent the place out again to raise as much cash as I can until the bank decides to do something and fight the battle then... all avenues here are going to put a major damper on my ability to invest and on my net worth. Feeling really foolish tonight :-/

Hello - I'm hoping someone on BP can point me in the right direction.

I bought and rehabbed a home at a foreclosure auction. I now have the home under contract for sale, but it appears I overlooked an issue with a junior lien on the property. I'm looking for advice on how best to proceed! 

Here is the situation...

The home had two liens against it - the original mortgage, and a line of credit. Both liens were held by the same mortgagee.

Lis Pendens were filed on both liens within a couple of months of one another. The senior lien then reached judgment, and went to auction, where I bid on the home and won. I assumed (incorrectly, of course, I'm a foreclosure newbie), that since the bank on each lien was the same, and that I was bidding on the action on the senior lien, that the junior lien would be resolved automatically.

My title agent is stating that since the mortgage company did not name themselves as a defendant on the senior lien lawsuit, that their junior lien is still outstanding and must be resolved before we can sell the house. So that’s the question - how best to proceed???

I think I have two options - I can contact the lender and see if they are willing to give me a lien release. The other option would be to file a lawsuit, which would take time and money, obviously. If I do this, would it be considered a quiet title action, an additional foreclosure, or what? Also, does anyone have tips on reaching the right person / group at the bank to discuss this? It's a regional institution.

Thanks for your help!

Hello BP!

I am in the process of selling my 'first flip'. In quotes because I had purchased / rehabbed the property originally to be a rental, but through a confluence of events I've decided to sell the property and pursue other opportunities.

Here is the subject property for the curious...

Catch the PDF below for the full spread!

I’ve had a ton of interest in the property as I was completing the renovations. Many people came by dropping in and expressing interest. They seemed ‘amazed’ that I was going to list the property for only $160k. At the end of my renovation, a real estate agent I was considering for listing the property (although knew only as an acquaintance of my in-laws, and hadn’t fully vetted her yet), brought me a contract at $155k. Since this was near my planned listing price, and saved me the listing commission, I accepted.

That offer was contingent on VA financing and has now fallen thru. I had already done a bunch of repair work the buyers inspectors had requested (they were small things that I already had the materials for so this cost me mostly time), but the buyers appraisal came back too low. As in $142k.... and needing a roof.

Laughable to me because this is the same valuation I got on an appraisal for the home before I did a done of renovations, when the market was lower, etc. Both of those appraisals also frustratingly used the same unimproved foreclosure REO sale as a comp. Not to mention that comp is several months stale now. Regarding the roof - although it is *not* new, I was up there making some of the buyers requested repairs and the shingles are all intact and have good granular coverage. I can say for sure I’ve financed much worse, and the roof has not leaked in the 1.5 years I’ve owned the property. Oh well: I guess that’s just the appraisal biz :-/

Now I’m trying to regroup. Now I’ve always been a buy and hold rental real estate guy. I’ve never actually listed a property. So I’m definitely out of my element! I need information / advice in the following areas…

• Roof – Is this now a ‘required disclosure’ just because of this appraisers opinion??
• Appraisals – Are these stored in a database somewhere? Is my property ‘snake bit' because of this hack job appraisal? A relative in the biz in another state says that the VA will store this appraisal so I may as well pass on other VA offers.
• Using a MLS Listing Service – Given the enthusiasm and interest I received without widely marketing the property, I am considering going this route, at least for a couple weeks, to see what kind of business I can drum up on my own. I’m not looking to sit on the property looking for an offer to fall thru, but if I can move it quickly and save the listing commission, that seems like a good plan. Any thoughts on this strategy?
• Locating / Evaluating Real Estate Agents – I’m struggling to define my criteria and strategy for picking an agent. I have a sales background, which makes me want to find someone with great production, which presumably would mean they’d get my deal done quickly and efficiently. On the other hand I can see that not correlating well with their conscientious handling of my interests. Any tips on evaluating agents?
• Any recommendations for an agent covering The Arlington Area of Jacksonville? (near Jacksonville University)

Also – Please Evaluate / Provide Feedback on the following promotional pdf I created myself: Ft Caroline Details PDF. I plan on using this as a template for future properties, so please critique both the format and the specific presentation of this property!

Thanks as always for the awesome Bigger Pockets Advice!!

I saw a post on BP one time about offering a nominal payment to the tenant AFTER an eviction if they left the property in reasonable shape - and *before* accounting for all the other costs that go on in the aftermath. Just cash on move out day.

It's a pretty good idea (I think) and a reminder not to let the sunk costs affect your decision making going forward.

Robert - you're right. They are expensive and best avoided if possible.

When I started I used some FHA financing and while it was still expensive, it wasn't nearly as expensive as it is today... and you were able to appraise out of your PMI which is no longer the case.

So - I wouldn't write it off altogether if the right deal came along and you were planning an exit... but it's not ideal.

An angle might be to get the 'right deal' under contract assuming FHA financing as the last resort / contingency in your contract while you pursue some of the more creative financing options on the site here. If those all fell thru you'd still have the FHA as a backstop to get the deal done.

Brian,

I think that's a fair analysis and I was wondering myself if there was something to the points you are making. I was getting bids though, and not haggling at all. I'm a guy who is willing to pay for quality work. I don't take my car to the cheapest mechanic in town because I know that you get what you pay for. To me if someone gets concerned that you can spot quality vs. shoddy work that's is a cause for concern, no?

I guess to me It's just amazing that someone would agree to an arrangement over the phone, set an appointment, and then not show up. I would never do that to someone in any business or personal relationship. Between my wife and I we seriously wasted hours upon hours on these folks.

I really don't know what to make of the whole situation though, lol.

-Dustin

Warning: I'm probably only posting this to vent. I hope I do not approach the level of a rant, but no promises :D

Seriously though - I need some insight here. Since shortly before Christmas I've been dealing with two vacancies that were by far the worst I've ever had. I knew one day I would have properties left worse for ware.... I did not expect two to come at the same time. But in a way I was grateful (initially) for the circumstance as I knew thought that it would force me to try my hand at hiring out work.

As back story - I've grown our real estate portfolio historically through shear will power and sweat equity, completing all of the work myself. I thought that the forced opportunity to do a ton of work in a short amount of time might be a blessing in disguise, and get me acclimated to the an alternate method of growing a real estate portfolio.

But - I was wrong. Instead my wife and I were left contacting an endless stream of people who would express interest in completing work only to never show up at the appointed time. They would 'get sick' or 'decide not to'. Today, the latest, was recommended by a realtor as someone who worked 'only with investors'. When he didn't show up today, and I contacted him, he stated simply & with impressively cryptic style that he was 'done with that'.

Let me assure you I still have no carpet.

All in all I'd say we've made arrangements with 20 different 'entities' some handyman types, some contractors. Of that list only one showed up to complete their job, which they promptly ruined. I sent them a scope of work and discussed the job with them extensively. Everything about them checked out - contractors license, competence in our discussion. Yet when they arrived they only ruined $1k worth of tile, which I later had to chip back out and do myself.

Arghhhhhh

Thus far I've finished one of the properties myself and re-rented it this weekend. The fortunate thing is out of my properties it was the one that needed updating the most.... so that's the silver lining I guess.

At any rate - with the rant line approached, crossed and out of sight, is there something I'm missing here with these contractors??? My four hour work week is currently at about 400 hours. I'm frustrated.

Thanks @Jon Holdman for that real world example and expertise. I always wondered how these refi's went down in unfavorable situations so I really appreciate the details from that scenario as an anecdotal example.

I do wonder about the decision making process from the banks perspective on a deal like that... it seems like if the property is that far underwater they would be more willing to negotiate terms, no? I guess @J. Martin might have hit the nail on the head and they figured the partnership was solid enough for another raise to put the deal together???

Seems like a game of chicken to me.