Kathleen A. Scanlon, Esq.

What will work depends upon your State and jurisdiction. There are two main hurdles to overcomewith a short sale: the short sale Lender's requirement that there be no excess proceeds and closing costs are exactly what they will allow and your end buyer's Lender's seasoning requirements, if any.

The double close, which requires that you close the short sale transaction first with cash (hard money) works if you end buyer is using cash, hard money or a Lender without seasoning requirements. Simultaneous close - can only be done with a land trust. A HUD-1 must be sent to the shorted lender for approval and the only way you can supply a legitimate HUD-1 is with a land trust transaction. It is complex and not for the novice.

An REO purchase, while technically can be done with a land trust, won't happen that way because the Bank-Owner will not put the property in a land trust to effectuate your purposes. If you have an end buyer, you will have to use the double close scenario and your end buyer must be getting a conforming loan (usually no seasoning requirements).

With these more exotic closings, I suggest using a knowledgeable real estate attorney who is experienced in these types of transactions. - Sun Jul 6 2008, 16:11

Once the court issues a judgment of foreclosure, title devolves from you to the referee. The auction and transfer of the deed make that final. Unfortunately, you no longer own the hone but are just in possession. Depending upon the laws of your area concerning eviction, it could take 60 days or several months for the process.
The bank will often "buy" the house back at the upset price (the amount of their liens) because of the belief that at least they have their collateral - the money is already invested. - Fri Jun 20 2008, 21:05

It is essential in today's market to work with a mortgage professional. It is no longer a matter of course for an individual to secure a mortgage - those days are over. Having said that, there is alot you can do - you can finance some of your closing costs, often up to 6% of your purchase price, there are downpayment assistance programs such as Ameridream etc if the increased purchase price can be supported. Speak to a real estate attorney or other real estate professional who has been in the industry before 2000 and knows mortgage professionals from the 90s. They should know how to write a mortgage in today's market. - Fri Jun 20 2008, 21:01

Propertyshark.com is an excellent resource for preforeclosure, auction and reo status on properties. You can also inquire with the bank's attorney, contact the REO division of the bank as well as googling the internet. Often each bank has a list of reo properties on their own website.
If you are going to attend an auction to purchase, you need 10% down in a bank check at the courthouse. While you don't have to bid the upset price (the amount of the lien the bank has) don't start ridiculously low or the bank will just bid the upset price and take the house back. Good luck! - Fri Jun 20 2008, 20:57

All real estate transactions are negotiable you have to do your homework to determine value. While I have read some of the other answers, they are not necessarily correct. Take for instance an REO purchase in Queens, NY that my client is closing on Monday. Option One bought the house back at auction.. It had 2 mortgages totaling $350,000.00. Our contract price is $215,000.00. Thats a difference of $135,000.00.

Not only are the prices negotiable, but so are the terms, to some extent. It is important to work with an attorney that knows where to push to get the terms you want such as having the Seller pay the transfer tax. While these homes are "as-is", the Seller does guarantee insurable & marketable title (this does not include violations, Certificates of Occupancy etc which are part of the municipal searches and are "info only").

Good luck! - Fri Jun 20 2008, 20:52