All Forum Posts by: William Hochstedler

The only reason that we wouldn't make an offer is if it would delay the foreclosure process, which was my original question. However, this goes both ways if a third party comes out of the woodwork with an offer at some future pre-foreclosure date (like in 2 months, restarting the clock). So I'm looking for additional information to best navigate the situation and facilitate resolution to a property that originally went into default in 1/12.

In my opinion, a short-sale won't go through on this property even at the listing price. If an offer (be me or anyone else) delays the foreclosure process by months, everybody loses. Banks are sitting on unserviced liabilities, fees are amassing, the asset is deteriorating, the listing agent is doing work he won't be compensated for, etc.

To restate the question: If there is an offer on a short-sale that is almost guaranteed to fail, does it typically prolong the foreclosure process?

I guess this warrants a general question: Has anyone ever convinced a 1st, 2nd, and 3rd to take a combined 35+% hit?

Foreclosure would be a form of euthanasia here. I don't want to prolong the agony.

And, for the record, I'm disappointed that the response to my first inquiry on BP questioned my integrity and didn't really answer either of my questions.

Wm

We intend to make a legitimate offer that we would happily perform on if accepted (by 3 third parties).

The property has liens totalling $170K, is listed at $112K and isn't worth more than $90K FMV. (It's had exactly 0 offers in 265 days). I've done short-sales before and just don't see three banks getting this done, so am trying to best position my buyer for the inevitable.

I do feel bad for the listing agent, though, because's he's signed himself up for an untenable situation. Ethical standards require me to not interfere with his relationship with his seller.

I can see how, without the details of the situation this might look predatory, but hope you understand that I'm not proposing anything shady or unethical. We didn't make this salad.

Cheers,
Wm

A client (buyer) came to me interested in a listed house in the pre-foreclosure process. The listing agent is not local and doesn't impress me as being able to get a short sale done as there are 4 trust deeds on the property.

The owner of record vacated the home a year ago and will probably accept any offer, as is typical in a short-sale as they will not get any money from the transaction.

Moreover, today, I just had the county recorder change the legal description to reflect the right-of-way easement established when the stated transferred the land to the municipality in the 1880's. (I just found out that the piece of land that looks a lot like the house's driveway is technically a city street and not properly reflected on the plat)

My client is in no hurry. In my opinion, his best bet is to wait for foreclosure, get clean title, then negotiate with the bank when we show them that the house doesn't have a driveway.

So I have two questions:

1) If I get the house under contract with the titled owner (at a price my client would take) how might it affect the foreclosure process which I foresee as our only realistic goal? I'm not too worried that a third party will come in and pick up this prop, but would like to throw a big monkey wrench into that possibility if I could. I've had contracts on houses that were foreclosed on while waiting for third party approval, but this was a while ago.

2) Is there any way to influence the opening bid at foreclosure (in favor of US Bank) or is there any possibility of buying the note (also at a discount) and have my client foreclose?

Thanks!

.Wm

Hi All,

With over ten years of residential investment experience, I recently started Highlander Investments up in our tiny corner of the universe with a business model closer to an investment club than a conventional real estate brokerage.

I registered for BP about a month ago and did not immediately introduce myself because I'm wary of social media in general. Since then, I've found BP to be an incredible resource for networking and shared knowledge.

So far, everyone has been generous with useful information and very welcoming.

Glad to be here.

Wm

Just to clarify, both of the times we've run into issues with UDOPL were when we had permits. They were both licensing issues. My fine was because I was pulling wire--my electrician was two weeks out--on one of my properties. Another instance, a temp laborer told DOPL he was working for my company, not the licensed roofer (we got that sorted out). DOPL probably does spot inspections on permitted job sites to make sure all workers on the site are properly licensed and have workman's comp. Also, be aware that the state is running around spot checking compliance with the new EPA lead-based paint certification laws (this one is a doozy).

Our local building department is much easier to work with as their primary goal is to ensure that renovation projects are done correctly. They are much more interested in code and safety. They are less concerned with who is doing what work (unless it's a botch job on the electrical service, for example). In my experience, the worst that's happened from working without a permit is getting a stop work order issued until a permit is in place.

Building inspectors can be your ally in a rehab and should be treated that way. They have seen many head-scratchers and can provide very helpful solutions. For us, they have signed off on a too steep staircase that we thought we would have to reroute, and suggested a shortcut to ripping out a whole section of plumbing, leaving most of the existing in place. Moreover, if you're flipping, you have this documentation to show it was on the up-and-up.

Ask around in your community (or here) which inspectors are the easiest to work with and try to get them to your site. We've found that our interests often converge in getting things done correctly the first time; and that a good inspector understands financial constraints and wants to help create a safe, habitable project. One of my colleagues even gets an inspector out as part of his due diligence.

Hope this helps,

Wm

Just to chime in, in Utah you must be an owner occupant (not just an owner) to be your own contractor. In other words, you cannot general your own investment properties without a contractor license. DOPL tried to explain the logic of this to me as they wrote the fine. Also, some sort of trade license is required for just about everything except carpet and paint--whether it's enforced is a different story and very specific to your situation.

If you're going to do a lot of this, you definitely should develop relationships with contractors. And be creative here, during the slow-down a lot of contractors let their licenses expire and have moved on to something else. It's often a matter of money and paperwork to get them active again. Also, your city has a public list of all the permits pulled. Keep this list handy when you're out and about and watch for who's working with permits and who's not. This information could be useful for a bunch of reasons.

Good luck.

Wm

Thank you so much for the detailed response. I've helped a couple of people contest assessed values and didn't make the connection with the Board of Equalization and equalized value.

I love the idea of data crunching on large swaths of information and your use of mortgages (I assume you have an appraised value at the origination date) and HPI are also compelling.

Although I haven't played around with it much, because our market is small and pretty homogeneous, I bet I could get just as meaningful information using age and square footage (also available on our tax rolls). But it's really interesting to see methods that people are using in other markets with different conditions and available data sets.

Thanks again!

@Dion

Thanks for the info. A few things:

Do you mean "accessed value" or "assessed value"? If so, I need more help on what that means. I think you must also mean "millage rate" rather than "mileage rate"

So to clarify, we're actually talking about 3 different values:

1. Assessed Market Value

2. Taxable Value

3. True market value

The relationship between 1 and 2 is based on the millage rate, and the relationship between 1 and 3 is the equalization rate. Is this correct?

In our county (Cache, Utah), all properties (45K parcels) are reassessed every 5 years with land and improvements on a staggered schedule so I would think a ER for the area would be impossible. I'd love a bit more information on who is determining the ER and in what context (e.g. rapidly changing markets).

In the podcast, Ankit was talking about his due diligence process in New Jersey. Because he's buying tax liens, his starting point is the list of props with liens for sale. After your clarification, he must be getting an assessed value included in that list and have to use an adjustment (ER) to arrive at market values to analyze the risk.

Thanks,
Wm

Great podcast.

Ankit described using equalized values during the due diligence period. I am not familiar with this term. What are equalized values and how are they used in the analysis?

Thanks,
Wm