This is a bit of a unique situation and I'm having a difficult time working this deal. If anyone can give some advice or share their experiences, etc. it would be HUGELY appreciated. Just so you have a little more info, I'll give a short back story.
I'm a Realtor in South Florida and I have a client who just purchased a townhouse in an HOA community about 3 months ago. This week he sends me a property he found on Zillow that shows that it's a pre-foreclosure, he's very interested in buying it because it would be perfect for him; its next door and they would both serve as investment properties. After a little research I learned that it's owned by the association and they have an attorney representing them in the case. They attorney is extremely unhelpful and refuses to talk about it in any capacity and the association does not have any real information on the situation.
After doing much more extensive research I learned that the property was purchased for only $5,000 last year by the association from an individual woman (the original lien holder of the property). My first thought was that the homeowner was not paying their association dues and the association found themselves in ownership of the property. I'm not sure how exactly that process works but I always imagined it works like a foreclosure where it goes on auction after a lien is placed on the property by the association, so it doesn't make much sense to me. I have researched the foreclosure case that the mortgage company is pursuing and the documentation is very unusual. They are suing the association, the woman who sold the association the unit, and any "unknown parties" for an amount that is much higher than the value of the property. But the reason it's unusual is because the woman who owned the property doesn't seem to exist anywhere.
The only conclusion I can come to is that the original lien holder purchased the property at the bubble around 2007 or that this was a fraudulent mortgage from the very beginning. In the court dockets, it shows that the attorneys hired a private investigator to locate the woman (original lien holder) and they could not find her, in fact, there was very little information showing that the woman even exists (aside from a few addresses and other minor info).
All these details are honestly not really relevant to my true question, but might shed some light on what steps I may need to take in pursuing this property. The only help the attorney is willing to extend is the following phrase "you can submit a sight unseen offer if you have an interested buyer." I plan on submitting an offer for my buyer but want to protect him from any of the legalities that might arise from this situation but also do not want to wait for the case to close and it go up for auction.
The amount the bank is claiming is owed is $211,000. The value of the property is about $180k ARV. I don't want to let it go for auction because it will sell for close to ARV since down here is such a competitive market. I'm sure by now the bank realizes they will not get the $211k but it also is not listed as a short sale. So as of now, if I were to make an offer, it would be considered an OFF-market unapproved short sale; but remember it is still in court. The association is still fighting the bank so if I made an offer, they would all have to agree and the bank would have to cut their losses, and the association would likely profit a great amount. How can I structure an offer that would benefit the bank and the association with a high likely-hood of getting accepted and closing out the current mortgage?
I know unapproved short sales are already a mess, but this case is even messier. Does anyone have any tips in a situation like this? The offer would be sight-unseen so no matter what we have to lowball, but I want to ensure my client is protected from all the legal issues going on if the offer were to be accepted.
Any suggestions for contingencies to add? What about offer structures or ideas? Maybe techniques that anyone can suggest that might give negotiation power in a situation like this? There really isn't anyone to talk to directly about it and the association still owns it, so it's not technically bank owned yet. Very messy situation. Any suggestions would be much appreciated.
