My First Deal
I'm so green, I'm oozing! I really could use all the help I can get. It's my first (possible) deal. I got a list of the upcoming sheriff's sales and saw a house very close to me. I got comps off the internet and saw that the house should be worth approx. $198,000 - 205,000. The judgment is for $150,000 and the sale is 8/5. When I was driving by, I saw the lady and stopped. She invited me into the house, which was in perfect condition. VERY improved, the husband is even painting now. It's in perfect condition and the basement was just finished beautifully. New pergoe (sp) floors, freshly painted.....She claims he's in total denial and isn't ready to sell. My plans are to go to the clerk tomorrow and see if there are any liens on the house, taxes due, deed holder, ect. When can the bank sell it to me? I'd like to get it preforeclosure. What else should I look for here. Do all liens show up at the clerks office? How do I check for the "quality of title", whatever that is? HELP!!!! She said that I was the first person to approach them. I'd like to turn this one around as quickly as possible. I have a lot of equity in my house, but no cash. If I need cash, I can get it, but would prefer to go it without depending on Daddy. What kind of financing do I go for? I need help all the way around![ Edited by maggyldy on Date 06/20/2004 ]
Oh, Please!!! Isn't anyone going to help? Aren't there any old timers that can remember how gut wrenching it is when you are just starting out? Some slick wheeler/dealer is going to swoop this one out from under me. But, I'm convinced that I wouldn't have been invited in by the wife if I had been an old pro. HELP!!!
You can check the title at the courthouse or recorders office. Make copies of the details so you have then handy if you need them later. A title company can give you a preliminary title report but it might not be current.
You should really be thinking of a subject-2 deal rather then buying the note from the lender. 1st they have little reason to sell based on what you said. 2nd it will take less cash. Maybe slightly more complex but not that hard.
If you go to the on-line shop here and buy John Locke's manual on Subject-to deals it will provide you with a step by step process. If there is something you do not understand you get automatic access to John. He is one of those old-hands who has done it all before so can answer just about anything you can come up with.
I know a few things also and there are others here. If you need an answer quicker then the frequency that I check here send an email (see my profile). I do suggest John's manual first. He provides his mobile number when you buy his course.
John
[addsig]
I guess a lot depends on how far in denial the husband is and how willing to be ruthless you are.
Assuming that the husband is so far up de nile he can see the aswan dam then your next stop is the mortgage holder. See if they will consider selling their judgement so that you can finish the foreclosure. Get some discount but this means being ruthless and throwing the nice lady and her hubby out on the street at some day.
Assuming the husband can be made to see reason then the idea is to get an agreement for them to move, re-instate the loan and find yourself a buyer.
The hard part, of course is that these people probably want to stay. Talk to them about how they got behind, what their goals are here. At some point you have to break it to hubby that he either needs to get his act together or this is going to get very ugly.
I should have mentioned that I have a lot of equity in my own home. Also, my credit is excellent. I'm sure this will effect which course of action I eventually take. I'm totally ignorant about financing, so I will take you up on your advise to buy the course on subject 2 deals. I have no clue what they are. Thank you sooooo much. I appreciate any advise I can get.
maggyldy,
Why are you worried about title when you don't know if you stand a shot at putting this homeowner under contract.
You need to approach the homeowner and tell them you are interested in helping them out of this upcoming problem. I understand that the husband is in denial but the upcoming sale is real and he needs to know that. If you are the one that gets to him first, explains his options as you see them, and offer him some solid solutions to his dilema, you stand a chance.
Don't be shy at this point or you will be exactly right. A savvy investor will get to him and the home will be under contract.
You'll have the time for your due diligence. Get him under contract!!!
Dave
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"Opportunity is missed by most people because it is dressed in overalls and looks like work." (Thomas A. Edison)[ Edited by dealfinder on Date 06/21/2004 ]
I like the idea of buying the judgement from the mortgage holder and finishing the foreclosure. What would the benefit be to them to sell the judgement at a discount only days before the sheriff's sale? The 7 month redemption period is up on 7/29 and the sale is 8/5. Also, would I have to start the foreclosure procedure over again? How does that work? This seems so clean compared to other options, but what do I know. On the other hand, I'd have to do the eviction. That can be heart breaking, I'm sure. I'm just not confident enough to do a subject 2 deal. I have an appointment with my attorney in two days and she's a true RE wizz. And, by the way, the reason that I looked into the title first was that I can't see even talking this guy until I'm sure that this is worth having. As it turns out, there aren't any liens on this fabulous house. If I look in the file and there isn't anyone else listed as plaintiff, does this mean that there truely aren't any liens beside the mortgage? Could I still be surprised with a lien after the sale? This all seems to good to be true. $150,000 total judgement on a $205,000 perfect house. Why don't people like this sell before it gets this far?
Which is cleaner and easier, buying the judgment before the sheriff's sale, or buying at the sale and risking other bidders. I asked a guy that works these foreclosures at the clerk's office about how many of these are sold on the sale day. He said "About 2 or 3 out of about 25 end in a sale at the auction." I've never been to a sale, but expected that there'd be investers there fighting over these deals. What's that about?[ Edited by maggyldy on Date 06/21/2004 ]
Often there are a lot of investors at auctions. However, the bank will be there bidding the price up. Chances are, they will bid it up to the point that margins are too thin for investors. Of course they then own the house but as you know, CA is a hot market. They will list it with their broker and sell it for full MV to a retail buyer in a couple weeks.