selling part of a property in foreclosure - Posted by brandon_ma

Posted by JT - IN on July 09, 2001 at 12:07:57:

Always do get the contract to purchase signed, with an excape (contingency) clause for yourself, in the event that the Lender doesn’t go along with the plan, here, before proceeding, as Ed has pointed out.

Ed: And here I thought you were at the coffee shop with that “mover and shaker crowd”, in that small town, instead of watching over investors like Brandon. Good Job!


selling part of a property in foreclosure - Posted by brandon_ma

Posted by brandon_ma on July 09, 2001 at 07:32:10:

I am speaking with a man in foreclosure. The mortgage being foreclosed on has two 1.5 acre lots on it, one with a
house, and the other a cleared lot ready for building. The man wants to sell the empty lot to bring his loan current and to pay it down. If I offer him a discounted price, and he accepts, how can he sell a part of this land (the empty acreage) which is part of the mortgage in foreclosure?

The details:

seller needs 22k to bring loan current
loan is for 220k
other lot with home is appraised for 600k
empty lot appraised 160k
three weeks before auction

I must do my homework on above figures, but this is what I have for now.
How would I get comps for land? Would I be able to get that from my realtor?

Any and all ideas are welcome!!!


Re: selling part of a property in foreclosure - Posted by JT - IN

Posted by JT - IN on July 09, 2001 at 07:55:51:


Getting comps and determining FMV is one thing, but do not overlook something here. The lender must give a “partial release” of this parcel of land, from the mortgage that is securing this property to the lender. This will effect the loan to value ratio of this loan, and the lender will most likely want considerably more than the $ 22k to do this release, especially since this borrower is in default now. Look at this logically, as if you are the lender, would you give up some of your security, if your borrower is already on the ropes? Didn’t think so.

Now what you are wanting to do is going to be entirely possible, but not by just sending the lender $ 22K, to make up back payments. They will want the “lions share” of what the owner sells the property to you for, and the owner may not want to go along with those terms, as he will be seeing this as a way to get his hands on some dough, and it may not work that way.

Best to understand this feature up front, and educate the seller about this now, and if this is a deal killer, then let it die a rapid death, before you invest lots of time in this thing, only to find this out down the road.

The comps are the easy part of this deal. Shop around and find out what similar lots have been selling for; not just what they are “for sale” for. Big difference! Good luck…


Re: selling part of a property in foreclosure - Posted by brandon_ma

Posted by brandon_ma on July 09, 2001 at 08:27:51:

Thanks for the quick response and for answering my question. So it looks like now I have to have my seller contact the lender to see how he can get a partial release on the property. I think he will go along with this, as long as that money(from the sale to the lender) can go toward the loan he owes (the 220k loan being foreclosed on).

Thank you very much!


One Caveat here… - Posted by JT - IN

Posted by JT - IN on July 09, 2001 at 12:02:59:

I do not take the Sellers word, for ANYTHING !!!
I must see it in writing, or I must hear it directly from the Lender, and then receive a follow-up hard copy, otherwise, a person in financial distress, sometimes has hearing problems. Meaning, they tend to hear what they want to hear, and this translates to leaving out an important detail or two, so trust the adage of “believe nothing of what you hear, and only half of what you see” goes a long way here.

Better safe than sorry, but this comes from experience; which is to say, a few experiecnes that I wish that I hadn’t had…


Re: No No No - Posted by Ed Copp (OH)

Posted by Ed Copp (OH) on July 09, 2001 at 12:01:58:

Do not have your seller contact the lender first.

First get your offer and acceptance on paper. Make your deal subjedt to the approval of the lender. Then contact the lender.

If you have the seller contact the lender first, it is most likely that he will somehow get the idea that his position is a lot more valuable than it really is. He will raist the price (they do it every time, just as soon as possible after someone shows interest), so get the price on paper and signed first.