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Old 01-08-2017, 09:10 PM
 
Location: Back in the Mitten. Formerly NC
3,819 posts, read 4,892,442 times
Reputation: 5254

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This term is newly discovered by me. I've never seen a house listed as a redemption before. I know about redemption periods, but this home was foreclosed on back in August. The redemption period is up in a few weeks.
How flexible are the sellers? I assume it is the seller, not the bank, that accepts any offers.

Background on Me: I changed careers about 16 months ago and make about two and a half times my old salary. I was able to quickly get myself out of debt. At this point, I have student loans ($12K) and a few thousand left on my car. Liquid assets are minimal, but I am able to save roughly $1500-2000 a month from now on. I originally planned on waiting to buy until I had a substantial down payment. However, my rent keeps jumping drastically with every lease renewal and the neighbors have gotten worse and worse. I need out. I decided to go ahead and buy, but with a max budget of $100,000 since available cash is minimal at the moment. When I applied for my mortgage, I didn't even let them approve me more than $100,000 because I didn't want the temptation to blow the budget. I was able to get a conventional mortgage requiring 3% down. (This all started with a flipped condo listed for $50k. I knew with it move in ready, at $50K, I'd be able to own it free and clear in three years or less. Except it needed all new windows. Including multiple sliders and other large panes. Probably close to $10K in windows. I'm still watching this one for price reductions. Resale values in that development aren't great and $50k was pushing the limit. Adding windows to the $50k would make it impossible to break even when selling.)

In my area, you can get an older condo in the $50-65K range. There are only a couple on the market right now and they all need work. I've looked at them all. I'd consider buying two of the available condos if/when they reduce their asking price. The others need tens of thousands worth of work, and even getting them in the $35-40 range would not be financially sound.

There are some single family homes available. Most are tiny ranches stuck in the 1960s. Since I live alone, I'm just not willing to consider a 900 square foot three bedroom. Too cramped. I did look at a foreclosure Saturday, but since mold is rumored, and it wasn't visible, I've decided to take a wait and see approach. I don't want to risk testing or any of that. If they drop the price, I'll consider making a move.

Occasionally, just like every other market, you can get a really good bargain. So, while I'm waiting for properties to hit the market, I've been looking over my price range, trying to pinpoint potential bargains and over priced properties.

This brings me to the redemption sale. There is a home that must be closed on in about 35 days that is for sale. They began asking for $170k (which was WAY over priced), and they knock the price down pretty regularly. They are now asking $130k. Comps are tricky. It is in a subdivision that was built in the 50s and 60s, that has about three houses built in the 90s. This house is one that was built in the 90s. Pre-recession, these homes (any age in sub) sold in the $160 range. Now, $120ish. If it has been updated, it can go to the $140ish mark. Being built in the 90s, this home is not updated, but obviously less dated than some of the others.

So, they are asking $130. Sheriff's Deed was for $98K. How desperate is a seller in this situation typically? I am so confused, because hasn't their credit already taken a hit from the foreclosure? What benefit do they have by selling now? Would I have a shot offering $100K and not asking for any closing costs? If I am understanding correctly, the seller would still be taking a loss at $100K because of commissions, correct? I can't go over $100K and pay my own closing costs. I wouldn't have enough cash until March, and this has to close in February.

Other hand... is it better to wait until after the redemption period and try to make an offer through the bank?

Thanks for any insight on this brand-new-to-me topic!

(Note: I emailed my realtor this evening, so I will not hear back from him until tomorrow. However, I have no idea if he has ever dealt with a redemption sale. He's only been an agent for four years. Even if he has dealt with them, I always like opinions. Plus I know that if it is feasible, I have to move on it immediately due to the redemption deadline.)

Last edited by jaynarie; 01-08-2017 at 10:07 PM..
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Old 01-09-2017, 09:15 AM
 
Location: Back in the Mitten. Formerly NC
3,819 posts, read 4,892,442 times
Reputation: 5254
Never mind.
I figured it out.
I should stop trying to think with only two hours of sleep
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