Thanks.. Really appreciate the input. Yes, I suppose the one I put there is merely a starting bid.. However even at 100% there is still room to make money. I hear what people say about not being able to pocket the equity, though I'm wondering if there's ways around that. A simple example may be just owning two LLCs, one purchases the note, forecloses and sells it to the other LLC for basically the value on the note and there's no need to be sneaky about it either especially as a real estate broker I can list properties on the MLS all day long and make it a "public" sale. Once sold off to another buyer than the note owner the original owner would have no claim to any additional equity. Also think in general it would be hard for any owner to make an equity claim against a distressed property, the whole world knows that a vacant distressed property sells well below market value. The value in the BPO's we all read assume a "sale" ready property, most sale ready properties follow closely with FHA guidelines. I have yet to see any FHA ready REO, minimum investment I've seen on any REO is around $10k and that's for a DIY. Call in a contractor and you're talking $20k. (this is the part of the market I know well) So at a minimum on said $375k BPO your actual sale price will be $355k (on a good day) because most home owners are going to want a move in ready property and most investors want more margin than $20k.. Throw in closing fees and you actual cash received is more like $320k.. If you added to that some legal fees for foreclosure, property taxes, and other misc. crap you can easily get down to $300k.. The rest well I think it's real easy to see how a supposed homeowners $100K in equity could disappear in a second in foreclosure without even trying too hard or cheating the system much. So long as you could justify it and show how said foreclosure really had no equity I think you'd be relatively immune from a lawsuit, which I think is how most banks as stated are getting away with foreclosing and keeping whatever equity they get. Equity is what caused this whole housing crisis.... Because what people failed to understand is that equity is just money on paper, it doesn't mean a thing unless you can actually cash it in.. And for said foreclosed homeowner, well your equity disappeared when you amassed a years worth of back payments, penalties, taxes, and then stopped doing maintenance. mind you I would say that sounds like a "normal" case to me. The case where there is a foreclosure on a first note where the home is worth 200K and the UPB is like 20K would be a whole different animal.
Also really appreciate the input on other possible issues, liens, mineral disputes environmental disputes etc. Most of these can be found out and resolved by ordering a title search before purchasing the note... Do you have an opportunity to do such after having an accepted offer on the note or do you need to do it before putting in an offer?
Another question, so I do realize that said notes are more like auctions curious how many auctions you have to lose to get one? These auctions seem closed, as in everyone submits their bids privately and the single highest bid wins. Are there some dummies out there like there are on the REO auctions that bid up way over what something is actually worth?
Thanks!
