Posted by Ronald * Starr(in No CA) on December 19, 2002 at 17:20:33:
Rocky-------------------
Well, that clarifies things some. It still does not sound like a great deal, but better than if it took $20K to fix.
Yes, when owners don’t call back, it is usually a good time to stop trying with them.
Good Investing*************Ron Starr********
pre-foreclosure deal within 2002 - Posted by rocky
Posted by rocky on December 18, 2002 at 17:52:34:
Ok, now it’s my turn to ask for suggestions. I have done quite a few deals in the past 6 months, but I have finally met my match, maybe. Here’s the deal: The house is going into foreclosure on Jan 2, so the trustees sale will be around Jan 23. The mortgage is from 2000 in the amount of $159k. The owner owes over $11k in arrears, and over $10k in tax liens. The lender will short sale the prop to me at 82% of the current appraisal value, which is $178k (so I can make the purchase at approx. $145.9k.) The after repair value appraisal is at $206k. There is a broker involved on the owner’s behalf who want 2.5%, and we need 3% closing. The owner also wants $2.5k to relocate. Great deal, and I don’t want to lose it. I have full funding, but on one contingency, that I can get the tax liens removed for $2k or less. However, now, with 8 business days left until the foreclosure starts, the owner is dragging his feet on getting the necessary info to his broker so that we can remove the tax liens, and the broker says that the owner has indicated that he wants to get a loan and pay off the arrears instead of selling the house. My question is how to proceed. I know he is in a difficult situation, but I feel that with all I have done and his broker has done, he owes us something for our trouble, and I really don’t want to lose this deal. Any suggestions on how to proceed?
Thank you for all your help, good luck and good investing,
Rocky.
Re: pre-foreclosure deal within 2002 - Posted by mrwi
Posted by mrwi on December 19, 2002 at 13:40:20:
As Mr. Starr has so nicely and gently put it, the owner does not owe you Squat. I also agree with the persistance course as well, but like he stated, you have to know when to pursue and when to run away. I am finally at the end of the tunnel on two deals that required persistance. I only hung in there because I had set myself up so that if nothing came out of the deals then I was not going to lose anything, but if they went through I had everything to gain. This is one of the keys to success in this business. I am not a novice nor an expert but I am constantly learning and trying to glean all I can from each deal or transaction, whether I make money on it or it crashes and burns. Keep trying and soon you will be able to spot the time to pursue and the time to run. GOOD LUCK!
Re: pre-foreclosure deal within 2002 - Posted by Ronald * Starr(in No CA)
Posted by Ronald * Starr(in No CA) on December 18, 2002 at 21:25:49:
Rocky—
You have left out some information that is crucial in evaluating the deal. What will it cost to get the proeprty to be worth “$206K?”
You also use the word “tax lien” which is unclear to me. What kind of tax lien? If it is a county property tax lien, there is no way it will be discounted. If it is an IRS lien, it might be. But, while I have not tried to discount an IRS tax lien, I understand that it usually takes more than a couple of weeks to do so. If is is still some other type of tax lien, it is hard to judge what the chances of success are.
Each of us has to decided for him/herself, but personally, if I were facing what you described, I would not be facing what you described. My back would be toward it and I would be walking away, looking for greener pastures.
It would be interesting to me how you think you can convince somebody else that he owes you something because you have put in time and effort to buy his property from him.
I get the feeling that you have some emotional investment in making the deal work, whether it is a good deal or not. Persisitence is the secret of real estate success. And it is possible that if you persist in trying to make this deal work, you will be successful. However, I am trying to understand when persistence is the wrong thing to do. I don’t have a mental model that allows me know this or to communiticate it to you. But my feeling is that persistence is the wrong course of action here. Maybe I am just easily discouraged, but I think that there have to be other avenues with better prospects of a pay-off than this situation presents.
Many of the wisest real estate investors recommend that you not make the sellers problem your problem unless you can solve the problem with a profit at the end.
Also, it is a beginner’s mistake to try to push a non-deal into a deal. Being energetic and pursueing a lot of paths in trying to solve a problem is admirable, I think, and provides success a lot of times. However, sometimes the situation does not yield to effort. The wise investor learns to sense the signs of too much resistence and turns off to another pursuit.
Good InvestingRon Starr****
Re: pre-foreclosure deal within 2002 - Posted by rocky
Posted by rocky on December 19, 2002 at 16:31:36:
Thank you for the input Ron. Let me clarify my position and a few points on the deal.
First, the tax liens are on the owner, not directly on the prop. however since the prop is in his name, they will
affect the sale. The lender has indicated that he can help us remove the liens from the prop and have them
attached to the owner so that we can have a clear title for the sale, but we will need approx $2k to do this.
Second, the amount needed for the rehab is just over $4700 (which we determined from an itemized repair cost estimate from a licensed and bonded contractor and a home inspection provided by the mortgage company which is foreclosing.) Third, my statement that I feel as though the owner owes us something was made because he has been telling
us all a long that he wants to sell, and he approached us about this deal. So, we have been putting it together
as a favor to him, though we do stand to make money from it. But now that we have everything in place, he seems to be backing out. So I feel as though he led us on, and I am frustrated due to this. Not because I am emotionaly tied
to the deal, but because I don’t like being taken advantage of.
So, if you all think the best thing to do is to walk away, and since the broker has all but done this already, and
since I can’t even get this guy on the phone, and since now there are only seven business days left for this
deal, I guess I’ll pick up the pieces of this one at the auction in late Jan. just like I told him would happen.
Thank you all for your advice and consideration.
Good investing,
Rocky