Got My Fist Potential Deal...Seller In Bankruptcy Process
i sent out my first mailings this past monday (only about 25) and got a call this evening (wednesday) from a potential seller...i don't have too many details as the husband called and the wife handles the finances - she wasn't home but was supposed to call me tonight - never happened. He didn't even know they were in foreclosure, but knew they were behind on their payments. He also said they were in the bankruptcy right now...i'm assuming he means in the process of filing bankruptcy? does anyone know if i can do anything with sellers who are in bankruptcy? here is the details i do have:
loan amount: $41,206
appraised at: $59,000
3 bd, 1.5 bath
according to my info, taxes are current.
this is my first potential deal. what do you guys think? do the numbers look good? can i deal with someone in bankruptcy? if the wife didn't call should i call them back tomorrow? help me out!
Bankruptcy temporarily halts collection activities.
If in bankruptcy, the homeowners are either trying to save the house (Chapter 13), or, are trying to walk away (Chapter 7).. essentially placing the house in the bankruptcy estate.
If there is equity, the bankruptcy trustee will want it to use to pay other creditors.
If there is no equity, the Trustee might abandon it's interest in the real estate, and allow collection activities to continue.
If the trustee abandons it's interest, and/or the automatic stay is lifted... you may be able to effectuate a transaction.
[addsig]
Does anyone do anything with mobile homes in NC?
bvenker,
Glad to meet you.
Your key here is to have the bankruptcy trustee release the property from the bankruptcy.
It looks like they have $18K or thereabouts in equity. So you are a little over the limit for a full homestead exemption ($15K) according to the state statutes. You could approach the BK trustee about releasing the property, I do not see a problem as the exemption is fairly close to the value of the equity.
http://www.moga.state.mo.us/statutes/c500-599/5130000475.htm
It is worth looking into.
John $Cash$ Locke
Have you thoroughly looked at the property? Are there any significant repairs needed? If so, you could possibly entertain the idea of doing a short sale...However, with them being in bankruptcy the Trustee must give the "ok" for the property to be sold.
And if you are successful in getting a short sale the Trustee also wants to be ensured that the homeowner will not get any of the proceeds...as well as the mortgage company.
If you are not up on how to do short sales, read past forums and articles on the subject.
Best of luck to you.
i have not looked at the property yet, as they just called yesterday. i should have been more clear about the numbers as well - the original loan was made in 1996 for $41,206. i thought the numbers looked good...but i guess not??
the trustee is not listed on the info i have, so i'm assuming i need to talk to the owners to get this information?
John thanks for the tip on the homesteading...do i simply tell the trustee that i noticed that is is marginally close to being exempt by the homestead act and ask them if they would be willing to release it based on that?
bvenker,
It may need about $3K in rehab work done, look at the property and see what you can deduct from the equity, you do not need much, get creative but accurate.
If you go down to the clerks office where they filed for bankruptcy, you can request their file as it is public record, this will show who the trustee is that was assigned to the case. The records are at the Federal Building in your area.
I have found that trustee's are very easy to deal with and will help all they can to get the case off their desk. It is an excellent learning process, so do not be intimidated, you have a right to ask and we all know what happens if you don't, nothing.
John $Cash$ Locke
ok called the owners and got no answer, no voicemail. trying again today...if i can do the deal, am i helping them in any way or am i just profiting from this myself? i know i could release the house from bankruptcy, but does that mean they are still going to be bankrupt eventually? does buying the house from them and stopping a foreclosure being added to the bankruptcy help or is it the same on their credit report?
bvenker,
I might suggest you get face to face with these people. Any problem solving or negotiation over the phone seems easier but, in reality, it is not. You need to build an emotional connection with these people and make them feel comfortable in revealing their true situation to you. Remember--you are trying to help them. Don't be afraid to knock on their door. Good Luck.
Dave
thanks everyone for all your input...not sure if this one looks like its going to work out but i appreciate everyone's support and input
I have a question for you! What sort of mailing did you use, and what did it say to generate their response to you.
Are you willing to share as I am curious?
Mark B
i use a large sized envelope and stampt "I WANT TO BUY THIS HOUSE!" on it in red ink. i hand address them and sign them all. the letter is pretty long, but its sympathetic and not pushy. i'm not a big fan of the "doomsday" letters some people like to send. i'm not trying to scare people into doing business with me.
Knowing the area you are probably looking at a top retail market value of $68,500 and the current loan amount is $41,206 a LTV of around 70%.
The big issue is this the current payoff if not you will have other fees such as late fees, attorney and court cost as well.
I never consider a deal until I am able to do a visual inspection on the subject property.
The first issue that you are dealing with is a customer that is not being honest with you "First Caution Sign".
Claims did not know was in foreclosure. I get this statement all the time from homeowners.
You need to ask your customer a few key questions:
If you sell your home what do you plan to do?
If you don't sell your home what do you plan to do?
What is the pay off of your loan?
How many payments are you behind? And what is your monthly payment?
Without answers to the above questions you do not have a deal!
You must establish your customer's need before going any further with this deal.