Foreclosure in Duluth>Question Details

Denise, Home Buyer in Duluth, MN

Home was listed at 89,900 but when I went to look at it the realtor said that was a mistake. The home had to be sold for 112k due to impending forecl

Asked by Denise, Duluth, MN Thu Jun 30, 2011

Can I make an offer for the 89,900? Is it beneficial for me to wait until the home goes into foreclosure?

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Ha good ole Wells Fargo they sure are a fun one to work with!

If you remember, once an offer comes in on a property a BPO will be ordered for valuation purposes. WF DOES have strict ratios for what they are willing to accept off of that number, but regardless they will accept or decline a buyers offer from that BPO.

My guess is that the BPO was higher than what the offer came in at & WF did not budge. considering the home ended up selling for half the value that is almost always the case.

Short Sales are still a mean one to work with but I enjoy it for some reason.
0 votes Thank Flag Link Tue Jul 5, 2011
When I say 'limited' experience I had a post sheriffs auction short sale listing where Wells Fargo refused to budge from what they paid for the property @ the sheriffs sale. Ironically when they ended up selling the property they got half of what they 'demanded' they get in short sale. If that scenario has changed, then so the better. This one situation is why I avoid doing short sales anymore. Give me foreclosures any day.
0 votes Thank Flag Link Sat Jul 2, 2011
They typically are cheaper once REO, but that does not always mean they are a better buy than short sale. There are a lot of factors for why this may be.

- # of liens on property that got wiped out.
- Home is typically winterized once vacant. This drastically reduces the value of the home many times, and I have seen my fair sure of "improper" winterizations leading to pipes bursting etc...
- Financing can be different. What was once FHA approved might not be the case if my above comment holds true. On the flip side things like Fannie Mae's financing can be very attractive.


and in my experience Michael it does not really matter what was bid at the sheriff sale. Lenders don't approve short sales on what was bid but what they believe the fair market value is. I actually prefer working SS post foreclosure for many different reasons, but mainly they are incredibly easier to negotiate versus pre-foreclosure.

For example, our Non-recourse state foreclosure laws don't come into play until the auction, so as you can imagine people with big 1st's almost always run into issues with prom notes or cash at closing. I gain a lot more leverage once the sale happens because now the lender knows they have a time-frame.

I am actually more limited myself in the REO role, so it would be interesting to hear from an agent on their take.
0 votes Thank Flag Link Sat Jul 2, 2011
If the home goes into foreclosure, the owners would (in most cases) have 6 months to continue to sell it as a short sale. If you're willing to wait it out, chances are it will be cheaper in foreclosure. My limited experience is once the bank buys it at sheriffs sale for X number of dollars, they insist that they need to get that amount in a short sale. Ironically they will end up taking a lot less in a foreclosure sale.
0 votes Thank Flag Link Fri Jul 1, 2011
All great answers and Cameron did provide a little twist. You can always go to the court and check property records to find out for yourself. I am not sure if the sheriffs department publishes these results or not.

REO's & Short Sales have their pros and cons. I tend to believe the greatest room for negotiation is in short sales with the downside of them taking longer.

If the comps support a 112k price then 89k probably not worth it. However, if your buyers agent (and most importantly the sellers agent) can show the comps closer to 89k you will have a chance.

Good luck1
0 votes Thank Flag Link Thu Jun 30, 2011
Denise,

You might also consider that the new figure might be the result of the winning bid at the Sheriff's sale. The homeowner may have been attempting a short sale when the property was sold at auction and now they might be attempting to redeem the foreclosure which doesn't require bank permission - a much easier and more likely transaction if the seller can find a buyer that agrees with the price.

Either way (short sale or redemption) you need more information about the situation and I agree with Steele that you need to determine on your own what the property is worth and make what YOU consider to be a fair offer.

Cameron Piper
Coldwell Banker Burnet
Licensed MN Broker
Web Reference: http://www.campiper.com
0 votes Thank Flag Link Thu Jun 30, 2011
Sally is correct. This appears to be a short sale situation and the bank has told the agent what they will take. At this point an offer of $89,900 would probably go no where. While there might be some give, probably not that much. But you could try it.

What you need to consider is what the house is actually worth on the market. Forget the $89,900 and forget the $112,000. If you are interested you need to get some kind of valuation to determine what would be a fair offer price. Then, should you decide to make an offer, you have hard facts to back you up.

As for waiting for it to be foreclosed... Yes, that is an option. You won't have to go through the iffy short sale situation (some 50% do not go through). And if there is more than one mortgage against the property and the first is doing the foreclosing you will not have to take into account any secondary loans on the house as they will be wiped off.

You may also want to determine just where the house is in the foreclosure process. Remember that in Minnesota most homeowners have a 6 month redemption period before the bank actually takes ownership. Depending on where they are at, this could be a long wait.

And another buyer could come in and try the short sale.

I would do the homework and then decide if you want to proceed or wait.

Steele V. Propp
Foreclosure Specialist
steelep@aol.com
0 votes Thank Flag Link Thu Jun 30, 2011
Without knowing more details about the property....I'm guessing this house would be a "short sale" at this point? Most likely the bank (who has the mortgage on it) has done a BPO (broker price opinion) and depending on what liens are on the property they have instructed the listing agent to list it for that price.

You can always offer whatever you want, but in this case, there's probably a reason why it's listed for $112K. And you need to find your own Realtor who can represent you as a Buyer's Agent. He/she will be able to research the property and determine what "fair market value" is, and what a reasonable offer would be. Good luck!
0 votes Thank Flag Link Thu Jun 30, 2011
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