Foreclosure going to trustees sale - Posted by Jonathan(Wa)

Posted by Jonathan(Wa) on February 15, 2002 at 15:38:37:

I would prefer to buy it outright as this is my first deal I want to make it as safe as possible until Im able to learn more(convention). I will get a POA today from the sellers. What else are you saying that I will need from the seller?

By the way these are how I see the numbers

Cost $150,000
Rehab $10,000 this is highly overestimated more like $5,000 just needs paint and landscaping
Closing cost $0 my minimal cost $1500 I will cover with rebate.
Selling cost $10,000 I will list the house myself
Payments during 5 months $6000 houses in this price range in our market average 30-45 days on the market

Do you think the deal is still to skinny to be a rehab? I can see where there’s more money to be made doing a L/O

Thanks for your feedback,


Foreclosure going to trustees sale - Posted by Jonathan(Wa)

Posted by Jonathan(Wa) on February 14, 2002 at 20:58:08:

First of all I have been a realtor for 1 year and a mortgage broker for 2 years now and have quit a bit of knowledge with the basics but not when it comes to foreclosures. I am just now getting into the investment side of the business. Here’s my situation; I came across a property today that has defaulted and a notice of trustees sale has been recorded. The notice says that all payments in arrears, late charges, fees,and advances must be cured 11 days prior to the sale at the courthouse to stop the sale. I got ahold of the owners(who are going throught divorce)and they gave me a release of information for anything to do with the property. They don’t want anything out of it themselves and i’m wondering if I can directly deal with the trustee, and how should I go about it, and with what type of contract?

Here’s the #'s

Payoff $137,000
Penalties & Interest $12,000
Rehab cost $10,000
FMV $195,000 - $200,000

Thanks for any help!

P.S. I’m planning on goint to the CREONLINE conention, sounds like a great opportunity.

Re: Foreclosure going to trustees sale - Posted by JoeKaiser

Posted by JoeKaiser on February 15, 2002 at 24:00:18:

A couple things . . .

The 11 day thingie isn’t set it stone. Per statute, yes, but the lender will often allow you to reinstate right up until the big day.

You don’t “deal with the trustee.” The trustee is strictly the lender’s mouthpiece, for the most part. The authorization will release info, but it won’t let you deal. Get a POA (but not in CA) to do so.

The $137,000 figure likely doesn’t include the $12,000 interest and foreclosure fees. I’m betting you’re at $150k right now. So, how do you figure you’ll get paid here?

$195k sales price, less $3,500 in closing costs on the buy side, less $10k to fix up, less, $7k in payments while fixing up, marketing and selling, less $19,500 in closing costs on the sell side, less the $150k already owed . . . less whatever else you haven’t thought of. Like, maybe $195k is too high. Or $10k in fixup is too low.

See the problem?

If you’re looking to do this for a quick cash profit, not gonna happen. Remember, the top 20% doesn’t count. It’s gone in the blink of an eye.

Get an option on it, find a tenant buyer with 6 or 8 grand, sell it to him in a year for $190k as is. Let him/her fix the darn thing up. You’re out a few bucks, but you can likely get that back with a 2nd from the local Associates type shop.

Tenant buyer doesn’t show, you get to walk away, no harm no foul.


Re: Foreclosure going to trustees sale - Posted by Jonathan(Wa)

Posted by Jonathan(Wa) on February 15, 2002 at 03:00:06:

Thanks Joe,

A couple of follow up ?'s for you.

  1. Your saying I should deal directly with the lender not the trustee? The lender won’t have a problem with that?

  2. How do I approach the lender? With a purchase & sale or have a contract with the sellers to catch up their payments and do an option with them?

  3. Will the lender allow me to do a deal subject to (Title,Inspection.etc…)?

  4. Along with the POA, do I need anything else from the seller?

Re: Foreclosure going to trustees sale - Posted by JoeKaiser

Posted by JoeKaiser on February 15, 2002 at 03:38:08:


The problem here is you’re asking questions that show you are entering the arena unarmed. That’s a problem. It’s not a bad thing and it’s unavoidable your first time through the gates, but geez, be careful.

With the POA, YOU stand in the owner’s shoes and the lender has no choice but to look at you and see the borrower. That’s why you can then negotiate with them in earnest.

You approach the lender with a plan that makes the lender happy. Otherwise, they just let the thing proceed along it’s predetermined route. If you’ve got a better solution, they may be interested. Sometimes, their hands are tied and they have no room (or incentive) to do anything but foreclose.

It is highly unlikely the lender will “allow” anything but a payoff. If you need the loan to stay untouched, you need a plan that “handles” the possibility of the lender calling the loan due. “Subject to” deals are nearly always done without the lenders approval and/or knowledge.

Yes, you need a bunch of stuff from the seller. Again, you’re in the arena where sellers are known to flip flop and come out fighting. You need to prepare for that possible scenario with documentation and technique that leaves the seller completely powerless to mount a future offensive.

It’s not as cold blooded as it sounds. Reality bites, you know . . . and sometimes, so do sellers. I’ve got the scars to prove it, in case you’re wondering.

Joe Kaiser.