Need expert opinion if it is a deal i should take - Posted by Anton

Posted by Hal Roark on June 28, 2003 at 16:54:30:

Amazing how experience produces wisdom, isn’t it? At least for those who persist and still remain in the game. Wishing you well,


Need expert opinion if it is a deal i should take - Posted by Anton

Posted by Anton on June 27, 2003 at 23:43:04:

I will meet with the foreclosure seller on sunday who wants to deed me the property. but i am not sure if i should take it. i don’t think this is a good deal and i don’t want to tie the property since seller is still market this property through agent (seller does not need to pay commission if he sell it himself).

this is the detail: i met with him last week and the house is in good neighborhood but his house is a mess, smell bad (he has 5 dogs, 5 cats and 12 rodents) and the floor plan is weird.

  • his loan balance with delinquent is 450K
  • there is prepayment penalty of 20K if the loan is paid off.
  • the monthly payment is about 3,800 a month.
  • the house is offered by realtor at 515K (the owner did appraisal three months ago and the value is 535K) but we think the market value is lower since the 515k is based on the assumption of 2100sq but when we checked in county, his house is only 1500 sq (the owner said that the previous owner build extension and it is recorded but the county lost the documentation). to be safe we will do comp for 1500 sq and the value is about 425K in that area
  • market rent for 3/1.5 is about 1,800
  • the fix up cost is about 20K

i can do subject to but what is my way out?

  • i don’t think i can lease own this or find unqualified buyer to do AITD since the monthly payment is too high compare to rent and the floor plan is weird and smell too bad.
  • i don’t think i can fix and resel it again since i will have to pay 450 + 20 (prepayment) + 20 (fix) = 490 and i need to pay closing cost, holding cost and agent commission.
  • i don’t think i can flip it since 450 is not even 80% of value

can you find a way out? do you think we can short sale to the bank. but if the bank thinks the market value is 515K, do you think they want to do short sale?

again i don’t want to give hope to seller and tie this property if i can not do anything with it…

Try a short sale or note discount - Posted by Bill Cook

Posted by Bill Cook on June 28, 2003 at 05:53:55:

This deal can be done, and it may turn out to be a great deal.

Instead of buying “Subject To”, short sale the mortgage or buy the note. Ask for 30 to 40 cents on the dollar. If it is not a FHA or VA loan, there is a good chance the mortgage company will work with you.

When short selling or discounting the note the more problems a property has the likely you’ll be successful.

Example: We put a house undercontract in Cartersville, GA four weeks ago. It’s FMV (conservatively) is $290,000. It has serious termite damage, stucco (sp) damage, a septic tank problem, and needs a major rehab.

The mortgage is $235,000. We are short selling. We’ll find out Monday or Tuesday for sure, but looks like the purchase price will be $98,000.

So your deal can be done, just do it a different way. Create the equity because right now you don’t have any.

Bill Cook

Run, run away - Posted by B.L.Renfrow

Posted by B.L.Renfrow on June 28, 2003 at 24:40:01:

So you’re thinking about taking it subject-to?

Do you have the back payments and the $20k for repairs? How many of those $3800 monthly payments can you make out of your pocket while the place sits empty before it drives you into bankruptcy?

Not to mention that this is a property with a balance owed of $450k PLUS repairs…which comps at only $425k?

Are you nuts?

Brian (NY)

Re: is it a deal i should take… - Posted by david

Posted by david on June 28, 2003 at 24:21:27:

sounds like your gut has already told you what to do. You have only IBS to offer as to why you maybe-sorta-should-kinda get involved. There is always a way to salvage a deal , but ask yourself why you want this one so bad? It doesnt sound like you are excited about it, eh?