Reaching for the sky - Going for the gold! - Posted by Rich[FL]

import · August 17, 2000, 8:17am

Posted by dewCO on August 18, 2000 at 20:24:58:

How long will they hold 'em before they fold 'em? Depends. And I’m not sure on what. When I worked at a real estate company that had tons of foreclosed properties listed from several different REO sources, and this is when the market was REALLY, REALLY BAD and getting worse by the day, they seemed to get serious at about 6 months! It sure amazed me. They’d start at market with a house that needed work, then slowly drop off a thou or two. It was incredible. Always wondered why they didn’t just price it right to start with. Guess they have to justify something or other on the their bottom line. SO I’d say there’s no telling, and each of them could be different.

import · August 17, 2000, 8:17am

Posted by Rich[FL] on August 17, 2000 at 08:17:40:

What are my chances? (Besides slim to none?!)

Picture this?exclusive but specialized development, an airpark. There’s not a lot of demand for houses or building lots here especially at this airpark because of the developer and his cronies (12 houses total, 99 lots total with potential of maybe 50 or so more). Values have been going downhill for the past 5-6 years. Developer took over owners association board of directors last year and has not done anything to maintain the facilities except to mow the grass.

Two years ago the developer built a real nice house without a hangar (go figure?)bordering the runway. Somehow he gets one of his stoolie employees to get a loan on this house to get some of his cash back($282k). The developer has small second on it too.

Stoolie employee stops making payments and fails to pay 1999 taxes. House is in foreclosure and courthouse sale is this Friday. (I’m going to attend just to see who shows up.) Mortgage balance and legal fees, etc amount to about $316k. The house will probably appraise out at between $350-$400k or more even though it is “functionally obsolete” in this airpark without a hangar. The bank, Equicredit Inc. out of Jacksonville, FL will have a HECK of a time selling it. There have been two houses for sale for over 2 years with no action at all. The reason - the reputation the current developer has around the area and the country both personally and in relation to the development and no one will touch this place.

The plan - I intend to wait 30 days after the foreclosure sale and send a letter to the bank explaining the situation here and how they have inherited an albatross (that’s a good Florida term! ); I’ll also include a purchase contract along with a cashiers check for $50k for the house to take if off their hands. It may end up taking me sending the contract and check several times in the upcoming months before the bank finally sees the light and accepts my offer if they ever do. And yes, it is a little insulting but what the heck. The guy they gave the loan to has at least 4 judgments against him and the scuttlebut around the area is he owes over $1M in judgments, both here in this county and other areas. So, the bank screwed up in giving him this loan in the first place. I can’t say I feel too sorry for them.

The upside potential? 5BR/3BA house, 4000sf+; I can easily rent this for $2k+/month to the local military people. Heck, many of them come out wanting to rent and/or use our spare hangars, etc. Doing this, I can be patient for the time it takes to find a buyer at FMV. Shoot - I may even move into it and rent out my house! The current residents are about to gain control of the owners association again so the required maintenance will finally be taken care of. The values should at least remain stable and maybe start to go up once a new developer is found. (The current one is in personal bankrupsy we hear but haven’t been able to confirm yet; this may end up effecting his development here somehow, at least we hope!) If someone could pick this up for 10 cents on the dollar it may be profitable. Hmmm, I wonder…!

Anyone have any good creative ideas on how to deal with a bank in this situation that may help me increase my already slim chance of making this happen?

Thanks. I’ll keep you all informed of how this goes. This could be interesting, if not fun!

Rich

import · August 17, 2000, 11:06pm

Re: Reaching for the sky - Going for the gold! - Posted by dewCO

Posted by dewCO on August 17, 2000 at 23:06:54:

Interesting story, but TOOOOOOOOOOOOOOOOOOOOO long to get to the point. Bank will list with a realtor in that price range. No chance at $50K would be my guess.

import · August 18, 2000, 7:44am

Re: Reaching for the sky - Going for the gold! - Posted by Rich[FL]

Posted by Rich[FL] on August 18, 2000 at 07:44:04:

You’re right about it being too long. It didn’t look that long as I was writing it.

However, if I would have posted only “bank foreclosure; $400k house, going to try to buy for $50k; what’s my chances” without any background material, I already know what the answer would be and it would have been pointless to post.

I guess a more appropriate question to ask is how long would a bank wait or hold on to their REO to get close to their asking price before entertaining lower offers, taking into account the property they’ve inherited and its location? I don’t know. I keep thinking this is a big liability for the bank and they may want to get rid of it quickly. I was hoping to get some ideas on how to convince the bank it would be in there best interest to unload it quickly rather than wait. After all, that’s what we’re trying to do as RE investors, right? Look for and/or create motivated sellers?

Rich