Is This A Possible Short Sale??????????????
I have come in contact with an older couple who are currently in foreclosure and the property is due to be sold on the 7/27. This is a 3 unit building with a first mortgage judgement of $141,000 and a 2nd mort. of $28,000. The building needs a lot of work. I'm estimating about $50,000 - $60,000 worth. The ARV would be appr. $250,000. However, I just found out that they are in a chapter 13 bankruptcy. Is there still a deal in this property? Initially, I was thinking short sell due to all the work that needs to be done. Because of the Bankruptcy this is not an option. Or is it? How should I proceed?
No, they did not file bankruptcy after the foreclosure was initiated. They filed in '02. Their sole purpose was to save the building. To my knowledge it has not been released from the chapter 13. They have fallen behind on their payments due to a tenant who has stopped paying rent. Nevertheless, they're in a chapter 13, fallen behind and the lender is going to foreclose.
The appraised value is approximately $150,000. The owners do live in the property.
What is the time frame on a Short Sale? Is there enough time to conduct a short sale if the property is released from the bankruptcy? Again, the foreclosure date is 7/27/04. Can this date be extended by the lender pending a short sale? Or is it best to wait until the property forecloses and is bought back by the lender(REO)? Then make a low offer to the lender. I'm thinking this is riskier with other investors/rehabers waiting on the sideline.
The house is a part of the chapter 13 Bankruptcy!!!!
The good news is you are in Illinois which is a judicial foreclosure state. Unless the couple has had an attny working on this matter I can practically guarantee you that the 7/27 date means nothing.
As I said before, if the bank can foreclose, then you can short sell. Just ignore the Bankruptcy and go full steam ahead.
Is there enough time? It is obviously very close. Do you have the trust of the owners? Are they on board to work with you? You can not work a SS without the help of the owners.
Yes the lender can extend the foreclosure date pending a SS.
You want to make your offer to the lender ASAP.
Brenda
Since it sounds like you're saying GO! GO! GO!.
Should I approach the 2nd the same as the first or are there different techniques when dealing with the 2nd mort?
Lets assume you get the place on a short sale and the BK presents no issues...
That is a lot in repairs for a place that will be worth ARV of 250K after everything is done.
Make sure you get a great price as you will be tying up a lot of cash and the project will likely take a long time.
One other issue is when the repairs are large the possibility of major overruns or items popping up that were not expected is pretty high also. Build in a good contingency fund.
John
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