Hello
A friend of a friend has contacted my partner and I regarding a possible investment property. He has received a letter from his bank stating that they will be foreclosing on his mortgage in 3 weeks (I don't have all of the details as yet). He wishes to sell the property for enough to pay out the mortgage so that he can clear his name with the bank. This would leave some equity in the deal for us. He contacted us as a friend told him that we have investment properties.
What sort of things do we need to look out for in this situation? Will the bank be happy once he can show them a sale contract proving that he will be able to pay his debt owing to them? Any help/comments regarding this situation would be appreciated. We are interested in this deal but have no idea what the next step is.
Thanks
LisaHi Lisaa,
This is pretty simple advice….and due to the time limits and complexity(?) you are best to visit a broker or solicitor quickly. Sorry I cant help otherwise.
Hopefully others on the forum that know will respond in the mean time.
Goodluck
MattHi. A good deal could certainly be had, but at this point it is usually too late – I think you will have to negotiate with the lender direct, or at make enquires that way, as they may be teeing up a real estate agent right now ready to auction the property. Things happen quite fast once the foreclosure letter arrives, but if your friends friend enquires if he can pay the balance in full and that is still acceptable to the lender, get cracking to see a solicitor. Let us know how you go.
Hi Lisa,
In this type of situation the only way to go is fast. Whether it is you and your partner that wishes to purchase the property or the friend who may still be able to refinance himself to save his own home.
Sharlene
[email protected]Thanks for your help everyone. I will ask our solicitor to contact the seller and get the ball rolling as soon as possible, hopefully they can contact the bank and find out exactly what is required.
Once the right to exercise the power of sale has been declared/enacted there is a duty to obtain the best possible sale result for the property.
I've seen this situation many times and it never happens. Hope its different for you.
There maybe some recourse though if a bank at this point knowingly allows the property to be sold under market value (they would need to release the mortgage). Their actions would have influenced the process of the sale and the seller would not be obtain fair market value for the property.
It's highly unlikely that the bank wont take the normal course of action and seek to obtain market value for the property via sale at public auction.
Thanks everyone for your input.
An update for you. Our solicitor contacted the bank (with the permission to of the seller) and the bank was happy to stop legal proceedings as long as they sighted a signed sale contract. As the sale was below market value the seller had to sign a waiver which releases the bank from any future action from the seller.
Settlement is tomorrow and we had access prior to this so we have almost finished tidying up the yard and we are ready to tackle the interior this weekend. As no-one had been living in the property for 5 months or so the yard was quite a mess and the interior not much better. However structurally the place is fine and all it really needs is a good clean, some new carpet and blinds.
The seller is happy that he gets out his mess with the bank (and various other debts associated with the property) and is looking forward to starting again and we are happy that we have bought a property with some equity in it. And the neighbours are the happiest of all of us I think as the house really detracted from the rest of the street.
A great example of win win Lisaa – thanks for sharing that with us, and a BIG congratulations. I'm sure this will go well for you in the future. Cheers
Good work Lisa
Can you tell us how much of a bargin you got?
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
We paid $130,000 and the valuation came in at $150,000 as was. With a quick cosmetic reno we expect it to be worth $165-$170k and the house next door which is similar rents for $170 per week.
We are not talking huge numbers but we are still very happy as it is our first reno to add value to an IP and we haven't had to put much money into it.
We have a LOC against another property which we used to purchase this place and we will refinance once we are finished the work required with a stand alone loan.
excellent!
Good use of the LOC too. That way the lender can lender on valuation rather than purchase price.
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
That is good to know Terry I wasn't sure how the lender would value the place when we refinance.
Hello
For those that are interested here is the listing of the property we reno'd. Turned out much better than we had expected, also cost a bit more than we expected, but we are happy with the result for our first go at it. There are a lot of pics in the listing.
http://www.realestate.com.au/cgi-bin/rsearch?a=o&id=104690353&f=30&p=10&t=res&ty=&fmt=&header=&cc=&c=95416751&s=sa&tm=1205038902Lisa
Looks fantastic, well done!!! Would love to see some b4 pics, do you have any?
Hi KIZ
Thanks. I will try to work out how to post before photos on the web for all to see. Will have a go at this tomorrow.
Lisa,
Nice place, well done.
JLHello
Well I think I have worked out how to load the before and after shots on Flickr.
http://www.flickr.com/photos/24479622@N05/sets/72157604079590089/Let me know if you have any problems viewing.
Lisa.
Lisa,
Good job – those brown walls were pretty sad!
did you paint the tiles in the toilet?
MattThanks Matt!
Yes the floor to ceiling tiles in the toilet were painted with tile paint.
Lisa
You must be logged in to reply to this topic. If you don't have an account, you can register here.
