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Foreclosure in 37013 : Real Estate Advice

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  • Home Buying14
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Activity 4
Tue Apr 8, 2014
Don Tepper answered:
Wrong.

They're not supposed to accept your offer.

They'll accept the best offer. If one doesn't go through, they may--or may not--accept the offer that (in their opinion) is second best. And that's not always the second highest.

Example:

First Offer:
$100,000. 20% down. Good credit history. Minor contingencies.

Your Offer:
$98,000. 10% down. Weak credit history. Major contingencies (such as selling your present house).

Third Offer
$93,000. All cash. No contingencies; buying in "as is" condition.

A lot of people would choose that third offer, even though it's $5,000 less than yours.

A seller can choose to accept, reject, or counter any or all offers.

Hope that helps.
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Wed Jan 6, 2010
Marilyn Bell answered:
This is one of those times where Dave Ramsey would probably ask you about your situation in reverse. If you didn't already own that investment property, would you put yourself in a position where you were struggling with your primary home to purchase an investment property that doesn't collect enough rent to cover the rent and is worth $20K less than you pay for it?

I agree with Kevin that you should talk to someone, however if it were me, I'd be talking about how I could get out from under the home. If you're insistent about keeping the home (because pretty much every option you have to get out from under the home will damage your credit - albeit that can be overcome in a couple short years) I would consider trying to sell it via lease purchase. You can often collect a higher rent that way.

If you can't find anyone who wants to lease purchase it, I would also look into renting it out to Section 8 tenants. Section 8 means you collect market rents (granted, rents are down in your area) and often with most of it paid directly to you by the government. That can relieve some of the stress of renting the house.

It sounds like you are precariously close to an even worse situation. One month of a tenant not paying rent or one unexpected repair can change things for you for the worse. I hope you can figure out a solution before that happens. One ray of hope is that I actually know people who have had their payments go down recently due to resets. I wish you good luck and hope for the best!
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Wed Jan 6, 2010
Marilyn Bell answered:
I would contact your lender first. Depending on the mortgage company, there may be a hardship package that needs to be completed first. They may also have a time requirement for the home to be on the market that would result in the lender being paid in full. For example, they may require the home be on the market for 6 months before you can reduce the price to an amount that would result in a short sale. And as Gloria advised, it is highly beneficial to use a short sale negotiator. Can you do one without one, technically yes. Are your odds much better to get the short sale closed with a negotiator - absolutely! ... more
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Sat Jun 6, 2009
Marilyn Bell answered:
Many banks have set up online bidding systems and provide a response very quickly (within 24 hours). However, there are still the 2 month response times out there.

I have a couple caveats for buying a foreclosure.

#1 - The banks are holding firm to the list prices (generally speaking). They will reject and reject and reject and then lower the price to a price lower than what has previously been offered. It's not hard to see why the banks are in such bad shape. They will do this and hold a house for months, and ultimately net less, rather than just get it sold quick for more money than they ultimately get.

#2 - The addendums that a bank will send back AFTER you and the bank sign the offer is FILLED with fine print. A big stickler is the $100 per day fee charged to you if the transaction doesn't close on time. And if your mortgage is in order, it's usually the bank that is the holdup. You would think the banks would want to dump these off the books quickly, but often it is the bank tying things up. Granted, there are a lot of foreclosures out there and the asset managers are swamped, but that's their problem.

#3 - If you do not agree to the addendum, it can be a long and difficult process to get your earnest money back (just went through that, but I did ultimately get the clients money back after threats of legal action - in this case the bank representative wrote in some stipulations on the original offer after the buyer's signature). If possible, and sometimes the other side won't let this happen, try to hold on to your earnest money check until you get the binding agreement. Attaching a copy of your earnest money check may be all you have to do with the offer. I believe the rule is within 3 days of the binding agreement date (I can check if you want to be absolutely certain), but it is usually written on the purchase contract for an earlier time (one day of binding agreement).

Foreclosures aren't always necessarily the "steals" they once were. You can usually expect to pay the fair market value. If one is listed below it's actual market value, then expect multiple offers which means it will go for more than the list price. With that being said, it can be easier and you can get just as good a deal on a non-distressed property. If you're set on buying a foreclosure, make sure you have an agent experienced in foreclosures. If you're looking for a fixer upper, then those are the foreclosures you can find at bargain basement prices (rehabbing one myself right now).

Let me know if I can give you any more information. Antioch (and nearby LaVergne) have a lot of foreclosures to choose from. Someone told me LaVergne was the foreclosure capital of the country, but I haven't checked that out. Good luck!
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