I’m starting to learn about real estate in general. A house in my neighborhood on yahoo real esate is in foreclosure with $25,000 left to pay on the house. Can you make an offer to the bank to pay that $25,000 off and take ownership of the house? Or do you have to go to the auction and bid that? Please answer both questions.
Thanks.
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You need to negotiate with the owner of the property, which will be the person who is in pre foreclosure.
You have no idea if the owner even wants to sell their home. Even if they do want to sell, there is not much likelihood that they will accept an offer to cover the existing mortgage. What you will actually find is that the amount owed to the lender is more than the 25K in that back payments, foreclosure fees, lates etc will be tagged on.
Also, you need to check your local state laws. NY has a Home Equity Theft Protection Act that gives home owners 5 business days to decide after contract signing if they still want to sell. More states are following. All states allows owners three businesses days under Federal law for a contract to be rescinded. You don’t want to be deemed as a predator!
If the property goes to auction, you need to be at the auction steps to bid on it, along with a 10% cashier’s check for the amount you are going to bid. It is unlikely that you will not have stiff competition at the auction if there is a pile of equity. Even the lender’s attorneys have a little leeway in bidding upwards, although any additional amount left over after paying the lender should go back to the home owner.
David Litterick
http://www.ShortSaleServicesForAgents.com
No, you can’t negotiate directly with the bank. The home’s owner owns the home, not the bank. The bank holds a mortgage or deed of trust on the home, but they are not the owner and cannot sell it. At this stage, the only person that can sell the house is the owner. You can contact the owner to see if they are willing to sell it to you.
If the owner fails to bring the loan current, the bank will then initiate foreclosure proceedings. You will have to attend the auction if you’re interested in bidding on it. Understand that the time it takes from the bank filing to foreclose on a home to the date of the auction will be 6-12 months or more. During that time, the owner can reinstate the loan by paying all delinquent amounts, penalties and fees and the home will be taken out of foreclosure.
The chance of a home worth many times more than the $25,000 outstanding loan balance actually being auctioned is pretty slim. Owners with equity have options and rarely let the home go to the auction.
I saw this great article on foreclosures at http://www.crystalclearmarket.com/?p=14
Hope this helps.
Elliot Lau, Realtor of 22 years
It doesn’t work that way. On Yahoo Real Estate, the amount shown is the deficiency of ONE lienholder (there may be others). You will need to thoroughly research the other lienholders on the property and be guided accordingly.
If you are thinking that you can buy a $150K house for $25K, forget it. It happens ONLY rarely.