Please Help!!! Sellers Filed Chapter 7 Bankruptcy~

Um set your feelings aside, I know it sounds harsh, but as investors we think and love numbers first, then due your due diligence as you would any other property, since the motivation is high and there is a severe time crunch get all the information you can, the Hoa fees, how much they are over water on,your comps for the property, also after getting your numbers come back here quick, do not promise anything to the sellers, also check everything in terms of physical walk through, speak to the home owner what potential problem is there for this properties and this is. A Hail Mary of a pass as they say in football but you may have to short sale and then sell, this is why 1) you do not promise anything to the sellers 2) combining the Hoa fees and how much you can get the bank to short the house for will determine if it could be salvaged at all these deal..... Furthermore this is an incredibly tedious task, I ask you now if you have Deans be a real estate millionaire and profit from real estate in 30 days book.

They are my very first lead!! I had sent them a letter and when they called me, it turns out they had 2 "under water" properties. Prop #1, ARV: $210,000, last statement says their unpaid balance is $289,995 plus unpaid HOA fees of $5300. Medium rehab, 1681 sq ft, vacant for the past year. Property #2, ARV $185,000, balance owed: $228,965 plus HOA fees of $5200. Also medium rehab, 1669 sq ft. & vacant for the past year. Their current plan is to let the house go, but will consider signing the deed over to me for both properties if I can come up with a plan. The community these houses are in is a pretty nice golf course community. Notice of trustee sale already set for 7/31/14, not sure if that's enough time to try to negotiate a short sale but was wondering if the B.K might put that on hold. No promises were made, they are from NY and just overly distraught over their losses... they put $100k down on each property when purchased in 2005.

Thank you so much for your quick response to my question. This site is such a great resource!!! I have & read one of Dean's book: 30 days to Real Estate Cash...

Dorthy

Let me check be a real estate millionaire in regards to the point you made of trustee sale..... But like before the timing is so sensitive.......

Dorthy,

are they in default with their mortgage, or just the HOA? Not sure if you have enough time to help the sellers, but you may consider doing a lease option? If Property is only $5,300 in arrears, you can try to negotiate with the HOA, where you can offer them half now, and the rest in payments, or in a year's time, etc. If you can find a tenant/buyer who can put down an option fee (use it to pay HOA) and pay a monthly rent that would cover the mortgage/taxes/insurance/HOA, then you may be able to help sellers out; however, as I stated earlier, time is running out...

Unfortunately, they are in default for their mortgage payments as well but I don't know how to find info regarding if they are set for a sale date... I figured that if they are willing to sign the property over to me, the lease option would be a successful strategy & it might be possible to negotiate with the bank as well? But it seems to be a little risky. I like your idea of negotiating with the HOA, never thought of that.

Thank you so much for your input!

Dorthy

Dorothy congrats on taking action, thats more than 90% of what people do. It does sound like its cutting it pretty close if not you gained some good knwledge huh.

Insidernotes, Valerie, & Tony~

Thank you for the support and input. After spending the night debating this deal, I think its too far gone for me, or anyone to do anything at this point. Yes Tony, I gained some confidence in speaking with the seller, and some real, live experience running numbers.

Thank you again, each one of you!

Dorthy

Interesting that the HOA is foreclosing. It will be interesting to see what the lender does to protect their interest. This could be a good deal for a savvy investor at the auction. I'd definitely follow the properties to see if the sale is postponed or cancelled. You will either have a lead on an REO, a short sale candidate, or a cash buyer.

No problem we are here to help

yea it looks like this could be a deal still, who knows maybe the auction got postponed. Your taking action! Awesome.

Its awesome you are taking on such a challenge. Good For you!!!

What you have to realize is that NV is a "super lien" state and HOA liens are behind property taxes and ahead of the first mortgage. So the ball is really in the lender's court. Will they pay the HOA to secure their position, or will they enter a bid of the balance of their loan at the foreclosure and end up with an REO? The big question is, is the bank even aware the HOA is foreclosing? Normally a junior lien would file a Request for Notice so they would be notified if foreclosure proceedings were filed, but would a bank in first position normally file a Request for Notice. Usually property taxes are escrowed so they would be aware of property tax issues, but how would they know about the HOA? While the situation for the owners seems bleak, there may still potentially be a deal there. Quite a deal to bite off for your first one, not as easy as matching your seller bucket with your buyer bucket, but you could learn a lot from it even if you didn't close it.

"For the fiscal year ending June 30, 2013, there were a total of 3,811 Notices of Sale reported by HOAs and 1,151 properties sold to a third party bidding at the sale. The HOA foreclosure sales prices are very low in relation to the fair market value of the property being sold and investors typically pay slightly more than the amount owed to the HOA, with a typical sales price being between $3,000-$12,000.
http://www.juww.com/pdf/The_HOA_Foreclosure_and_Priority.pdf

I haven't heard any comments on the bankruptcy. Usually filing bankruptcy will delay the foreclosure process until the bankruptcy is final. the debtors will have a chance to appear in court in regards to the BK. Usually it delays all foreclosure processes.

Bankruptcy will temporarily stop the foreclosure process but the bank will file a waiver (which is usually granted) and the foreclosure process will continue. Of course, if the houses have true equity, then it can take another course as the debtors have Federal and/or state parameters that can be asserted.

But in your this case, as you have explained, the owners are on the short end of the stick as there are too many entities fighting for their piece of the pie.

As Trey mentioned, the HOA probably had the stay lifted so the foreclosure could continue. Since it is a chapter 7 liquidation and the properties are upside down, there is no equity that could generate any funds to pay off creditors. Since the properties are now under the control of the bankruptcy trustee, the owners are pretty much out of the picture now. The question now is, what will the first position lender do. They may have been made aware of the HOA foreclosure by the bankruptcy proceedings, or maybe not.

You guys are amazing! Thanks for the input, I will keep you updated...

Thanks again,

Dorthy

So..... How's it going?