Foreclosure in Henderson>Question Details

Rob Anderson, Both Buyer and Seller in Henderson, NV

Buying a foreclosure to offset present loss on primary residence

Asked by Rob Anderson, Henderson, NV Mon Feb 25, 2008

Hi again

I had a wild idea that Ineed advice on. I bought in 2006 at the peak. I paid 342000 for a house in 89002 that is probably worth 275 to 285 at current market conditions. I owe 268000 on it.

My wife and I make over 100K per year with no other debt and 40K in the bank. I have a credit score of 760.

What would be the possibility of buying a foreclosed or short sale with a pool in Silverado Ranch, Green Valley, Paradise area and what would the pricing be like?

Would it be worth it to lose all the eqquity in the other house to hopefully gain equity on the newer home?

Can this be done?

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Answers

7
HOld on to it! The market will be back. If you have the money buy a short sale or foreclosure. Things are turning around. Dont let your home go. Buy low and sell high. I would like to share some information with you regarding how I learn to do these deals. If you have money and credit, and are not doing real estate now! You need to learn to do it fast. Shoot me an email I have something to share with you. Your in a great spot now! Lori from Vegas
0 votes Thank Flag Link Thu May 8, 2008
I don't see why he would have to walk away and get foreclose on. He only owes 268000 and feels it is worth 275-280000. The only issue he'll have is getting his current house sold in this market. So if he sells for more than he owes (even though it is less than he paid), there won't be any issue as long as he leaves himself with enough resources to close on both the sale and the purchase. With 760 credit and good income, getting a loan on the new home won't be a problem.
0 votes Thank Flag Link Wed May 7, 2008
I have a client who is in a similar situation. He purchased in 2005 as a investment. The monthly mortgage payment is killing him and he wants out. He put enough cash down to be able to sell without asking the bank for a short sale. The problem is he is afraid of loosing the cash he paid upfront.

I suggested he sell and take the loss, as it will take years before he gets that equity back via appreciation. Saving the monthly mortgage payment alone would recover the lost cash in as little as 10 months, not to mention the fact of instantly improving his quality of life with the extra cash in his pocket. I also suggested he could purchase a similar home in foreclosure at a discount, thereby getting a more manageable monthly payment and regaining his lost equity sooner, if not instantly. Plus, there would be the additional savings in interest he currently looses on his over-inflated mortgage.

So, I see the logic in your idea. The cash you put down & the equity you had on your current home is "gone" and may take years to recover. If you can stomach the risk & follow through, I believe you'll be in a better financial position with greater upside potential sooner as the market finishes its correction. Plus, if you get a good deal on your new home, your mortgage payment will be lower, providing you with additional monthly savings, allowing you to keep more of your income. Do the long math and you might be surprised at how soon you'll regain your loss.
0 votes Thank Flag Link Wed May 7, 2008
Get out of that house now and jump on a REO in the Green Valley Ranch area. It's location will rise much more than the house you have now. Some people would buy the second house and then just default on the first. You'll take a credit hit...but will come out ahead in the end.

I personally would try and rent the house for what you pay for in rent and maybe even do a lease to own type of deal with the old house.

bottom line...get out....can't say it any more clearly than that.
0 votes Thank Flag Link Tue May 6, 2008
I would like to upgrade from a home built in 78 to something newer, but this is going to take some doing.

Thanks to all for the answers. We were trying to move for a better career opportunity, but the housing situation is so bad right now, we had to pass.
0 votes Thank Flag Link Tue Feb 26, 2008
Rob, I basically agree with the previous answer. However, your "loss" is only on paper. Are you not in love with your current house? I always suggest to my buyers that a house is something you live in first and fourmost and in the long run, it is almost always a good investment, the secondary benefit. If you look at your home only as an investment, then yes, buying a distressed property could lead to gains in the future. What you are describing is a bit what stock traders do when prices fall, sell short then buy back when it hits the bottom. There ARE some tremendous values in the bank-owned properties right now. I'm seeing some minor fixers just below $100 per square foot in some parts of the valley. If you seriously want to go this route, call or email me and we can discuss your needs for the next home and get your current home sold or rented.

Thank you.


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John A. Brassner, MBA, Realtor
Windermere Summerlin Real Estate

Cell Phone: 702-808-9816
Fax: 702-995-0488
Email: john@john4realty.com

10777 West Twain Ave, Suite 105
Las Vegas, NV 89135
http://www.NevadaRealEstateCenter.com
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0 votes Thank Flag Link Mon Feb 25, 2008
Hi again Rob!
I assume you would not walk on your current home and just sell it at current market value or keep it to rent out? If so ... I would say Yes. Keep in mind you have to look at it as a long term investment. Don't expect instant equity in the foreclosed or SS purchase. Banks want to recoup as much of their money as possible. A lot of the foreclosed properties have been trashed by disgruntled owners. These are where you can possibly get your best deal, but be prepared to do some work fixing them up.

Again ... find a good local Realtor to help you and advise. You will need to get good comps to know that what you are buying truely is a "Good Deal."

If you need some recommendations for Realtors let me know.

Fred
0 votes Thank Flag Link Mon Feb 25, 2008
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