<p>Any one have any actual experience with a renter living in a home being foreclosed upon and successfully negotiating to buy it from the bank?</p>
<p>Any tips?</p>
<p>Notice of default was posted today on the door, owner has 30 days to clear the default and 120 days later it can be sold at auction, but that is by a trustee which would mean a cashier’s check.</p>
<p>The renter would like to negotiate terms with the bank to get a loan in the amount of the default.</p>
<p>Further complication is that this is a commercial loan, condo/town home development in which only 1/2 the units have sold thus far. The pay off amount due would result in a payment similar to the rent amount and would be a great opportunity.</p>
<p>Just a thought - the bank can not agree to sell the house unless it owns it. The foreclosure proceeding is specific as to when the bank gets title etc., and it varies from state to state. Probably if the borrower and renter can get in touch with the proper people at the bank and could work out some transfer with a new mortgage to the person who wants to buy the condo, a lot of fees could be saved by the bank. I am not sure that the borrower would be motivated; is it a non recourse situation?</p>
<p>I’d be careful buying a condo/townhome in a development with only half of the units sold if it appeared that the rest of the units would remain empty for quite some time. There’s a certain level of maintenance that has to go on and it applies to all of the units so that the condo may have to have those paying their condo fees paying for maintenance and services to the units that haven’t been sold or that haven’t been paying their fees.</p>
<p>There are other potential problems with vacant housing and the effects on neighborhoods.</p>
<p>All the empties are rented and it is a development that has a much larger overall size and great reputation, but in a small resort town it is a slow sale at any time, this could be an excellent opportunity for some one who plans to be there long term.</p>
<p>You can’t buy directly from the Bank in a foreclosure process. The open bidding establishes the sales price for determining what the prior owner gets (excess over the loan), or still owes unsecured (home sold for less than loan). The bank can decide not to sell for the best offered price (and hold the property), and at that point you can negotiate with the bank.</p>
<p>What you can do is simultaneously negotiate with the Bank and the Owner. Offer $x, and if both agree, then the foreclosure process is stopped by the voluntary sale to you. The bank might be willing to finance the purchase price.</p>
<p>You can also try to get qualified by the Bank for a loan to bid at the foreclosure. That loan would then provide the funding for the Cashier’s check.</p>
<p>There are many, many pitfalls involved in purchasing property in what’s often called a “short sale” - a sale agreed upon by the owner & the bank in an attempt to avoid the foreclosure & auction. This would be true even if this were a single-family house. It is much more so when you add all the commercial, zoning, and other aspects of purchasing the type of condo you are discussing.</p>
<p>Get yourself an attorney who specializes in this type of deal - they’re out there. (And get one who did this before last year’s real estate collapse. Many lawyers whose practices have fallen off in other areas are now getting into this, and don’t have the experience you need.) Let the attorney guide you and help you with the negotiations. </p>
<p>DO NOT attempt to do this on your own; you will live to regret it.</p>
<p>I agree about getting an attorney who does a lot of this all the time…the Texas legislature has about a zillion bills pending that would change the foreclosure process in some way…I’m sure most states have similar situations…your attorney needs to have up to the minute experience.</p>
<p>FYI- I did speak to the bank yesterday and they would be willing to talk to us, but not until after the trustee’s sale. Before that they do not own it and cannot deal. So nothing on that avenue until fall.</p>
<p>The owner is a great guy and I have known the entire story all along, but I am not sure he will be motivated to deal until he has exhausted all his resources. I am awaiting an email back from him in answer to my questions yesterday.</p>
<p>So, for now I will wait to see if the owner has lost all hope and will deal now or if he is going to try until the end, then the tenant could deal with the bank directly.</p>
<p>Most condo financing now requires 70% of the units to be sold before they can close the loans. That’s for loans to be conforming and eligible for resale. Under that financing is harder to get.</p>
<p>Thanks, Barrons, good to know…the renter is asking the bank which holds the construction loan to do a home loan, we shall see where this goes ;)</p>