How do you get access to foreclosure that's vacant to determine repair costs?
I understand that I need to locate the owners to get approval to discuss purchase with mortgage company. The house is vacant, the county info shows the house now listed under the mortgage company's name, and there is a lock box on the front door and a realtor's name in the window. How do I get access to the interior to determine damage and repair costs to send a purchase package with pictures, to the mortgage company. That's assuming I can locate the owners, who've obviously skipped, they took all appliances that I can see from the window and even took the outside lights off the brick! If I see the inside with the realtor, don't I have to include them in the deal
If there is a realtor sign in the front yard the sheriff sale has failed and the property has been bought back buy the mortage company. You now have to contact the realtor and schedule a time to view the property. You also have to make an offer to the realtor and you have to have prof of funds to buy the house. IE a letter form the bank .Or you will get a bad name and it will spread quickly.
You dont need the letter from the bank to view the house though.
I hope i helped
I was actually thinking of keeping this one! So, I would have to go through the regular process of a mortgage loan FIRST before I send a "packet" through the realtor? Who pays the realtor's fees? Would I include the mortgager pickup the fees in the offer?? How much different will this be from a regular short sale?? But don't want the holding mortgager to know the amount of the loan vs the amount I want to pay since I'll have to put about $30K into the house.... Thoughts?
Kathleen,
When you buy a REO, it's just like buying from anyone else who is selling thru a RE agent (well almost ). You make an offer to the agent, the agent relays it to the bank, and the bank either accepts, declines, or counters it. There is no shortsale anymore.
As with all RE agent listings, the seller pays the agent's commission out of the sale of the property.
Like any other seller, the bank that owns the property won't know anything about your financing other than you have some. Like cashuout said, though, you need to be preapproved with a bank letter BEFORE you make an offer are most likely the bank won't accept it.
Don't know what kind of financing you are getting for the property, but your lender will have to know what you are actually paying for it versus any money for repair.
The RE agent will be able to assist you with any of the paperwork, just remember that they work for the seller. Also, don't try to 'go around' the agent. All this will do is cost you any chance of getting the house because the bank will not deal directly with you and the agent will find out.
A little benefit of using the listing agent is that the agent may push your offer over one that may be a little more if the other offer was thru another agent. The reason is because they won't have to split the commission. Though they're not supposed to do this, greed can get to anybody.
good luck
Roger
Roger, thanks for your reply. How do I get the cash then to fix her up?? If I have to finance w/ the bank for the purchase price, do I try to do a 2nd equity loan based on the home retail value from an appraisal??? This house needs major cosmetic work....
I wonder if you got in good with a smaller finance company if you could convince them to call you with their foreclosures before they hand them over to the realtor for sale. It's my thiking that th realtor is jacking up the price higher then what the Finance company would settle for since he wants to make some money too. Thoughts?
TNMoneyman,
In my experience, that's not the case. The seller is the one who ultimately sets the price anyway, not the realtor. The realtor may give opinions, but it is up to the seller to make the price or accept the offer. In fact, in several instances, the realtor has tried to get the bank to reduce the price because they have felt it was too high for it's current condition.
Kathleen,
Just so we're clear here, you're NOT borrowing from the bank that has the property. They are the seller. Go borrow from another lender. Now as far as the loan goes, there are several ways to get the money. Offer full price and have the seller credit back repair costs, thus reducing your out of pocket expenses and possibly receiving a check at closing. Do an immediate refi on the property and pull money out (if FMV is high enough). Borrow thru a construction loan. Find a hard money lender. Find a private investor. Borrow the money from friends/family.
Learn to think creatively when looking for the cash, not when making the offer.
good luck
Roger
Roger, what great ideas! I would never have thought about the Cedit back from the seller for the repairs, that would save additional closing costs from doing an immed. refi on it. Is it your opinion, though, that the mortgage company may not be as motivated as I think they are, since they've handed it over to a realtor, even after the county sale must have failed? Should I still go in really low?
It's total market value is listed at $269K on the county tax records no last sale amt listed but last sale date of 3/06/03, I'm assuming take back by the mortgager. It's only 3 yrs old and the houses are running about $300K now. With all the repairs, how about I offer $260K with $30K credit back on repairs??
Thoughts??
$30K is sounds a little high, but if you can show the bank that the repairs are that much MAYBE (that's a big M A Y B E) they will give you half.
They will want to know HOW you came to that amount.
The repairs would also probably have to be major repairs to be considered (ie roof, plumbing) not cosmetic stuff (ie flooring, paint, appliances, light fixtures etc.).
But as always, it never hurts to ASK.
Kathleen,
Lenders use realtors because their not in the business to sale houses any more than they are to own them. It doesn't really mean anything about their motivation.
gbp is right about the repair credits. Any amount of about 3-5% will be questioned. They must be major repairs and usually need to be in a proposal from a licensed contractor. The seller can also agree to pay all closing costs or give a % allowance for it (usually 3%).
Keep in mind, you're dealing with a lender as the seller and lenders are very conventional. They won't like a creative offer much, so keep it as simple as possible.
What is the propery listed for and what to you believe the repairs will cost? Before I'd give in opinions on what to offer, I'd need to know that.
Roger[ Edited by rajwarrior on Date 06/14/2003 ]
Quote:
On 2003-06-14 14:04, TNMoneyman wrote:
I wonder if you got in good with a smaller finance company if you could convince them to call you with their foreclosures before they hand them over to the realtor for sale. It's my thiking that th realtor is jacking up the price higher then what the Finance company would settle for since he wants to make some money too. Thoughts?
Good thought process. I have done this and actually had them offer me 0 down financing. Of course they know me, and my credit is creme de la creme. 7% is 7%. I've also asked to be put on the call list if they have someone in financial trouble that I could work a preforeclosure typ deal with, although that's treacherous ground, because of privacy issues. But, we're entrepreneurs!
[addsig]
Shawn,
A good workaround for the privacy issue is to have the bank give your number to the homeowner in question and let the homeowner call you. No privacy, moral, or ethical problems doing it that way.
Roger