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Stick to your guns. I personally would not take on a tenant in a foreclosed home. Let the bank deal with it first. That is, of course, unless you are an investor and want a tenant.
Just an update on my situation. According to the listing agent on the property I am trying to purchase, Freddie Mac/Homesteps has silently agreed to evict the tenant. However, they will not give us anything in writing stating their intentions. I talked to my realtor and she advised that I just sit back and relax because by law, they-Freddie Mac-have to give this tenant 90 days to move out and it could take as long as 6 mos. I will keep posting any progress in hopes that it may help anyone else going through the same situation. Something that may be helpful for both buyer and seller, my attorney told me that if I close on this house, accepting the responsibility of evicting the tenant, the tenant could-by law-request a jury trial. My attorney told me I stand a great chance of winning if it should go to jury. However, in the unlikely event the jury members are facing similar situations, they may side with the tenant and allow him to remain in the home as an unwanted tenant. In that case-according to the law-the only way I would legally be able to evict the tenant is for a breach in contract. For me, this is too much of a gamble. If I get this property, I will be getting it for a great deal under market value. However, if the tenant decides to destroy the home on his way out-as most do-my investment will be considerably larger; not to mention the legal costs that I will incur as a result of closing and taking on the tenant. If anyone is considering closing with a tenant living in the home, weigh all the "what-ifs" before moving forward with such a bold move. The stress level and attorneys fees have already been high for me just to get to the point that I am at in this transaction.
Last edited by tumbleweed118; 08-25-2011 at 07:58 PM..
"this" = [ Most tenants destroy the property that they are being evicted from, that is? ]
If one really believes that this is a usual outcome, why would anyone want to buy such a property with an existing, possibly hostile tenant?
Note that the following ... ... is not a good reason.
Even though I don't believe that most tenents will destroy anything, I cannot possibly imagine wanting to buy such a loaded property.
I do not have valid statistics on tenants destroying the property, I am speaking from what I typically see in my area. I have been in the business of flipping houses for many years. I have yet to buy a house where the previous owners have not destroyed certain aspects of the home. Typically, what I see in buying foreclosed properties is drywall ripped out, interior doors broken off the hinges, carpeting ripped up, kitchen cabinets or countertops busted up, or toilets ripped out. On one occassion, the homeowner ripped the stairs out going to the second floor. Again, this is not a scholarly source in which I am drawing my information, I am simply speaking from experience. Furthermore, the tenant in question is not the typical renter. The tenant I am speaking of in this situation is the previous homeowner that was foreclosed on. I cannot speak with any knowledge on how a typical tenant leaves a home.
To answer your question as to why anyone would buy a house like this, keep in mind that the ones on here that are looking to purchase such properties are not willing to purchase the property with the tenant still living in it. When you place a purchase contract on a Freddie Mac property, they send back addendums that the buyer is expected to sign. One of those addendums states that the buyer will take full responsibility for the tenant-I am paraphrasing, but that is basically what it says. I do not know why anyone would take on that risk after speaking with my attorney. If one were to take on the tenant, it could get very costly in legal fees.
As far as buying a home that has been destroyed by the tenant prior to eviction, I have no problem with that purchase. If the purchaser can make the necessary repairs without having to contract the work out, it can be very lucrative. In some cases, there is still a profit to be made even after contracting the work out.
Last edited by tumbleweed118; 08-30-2011 at 04:46 PM..
... I am speaking from what I typically see in my area. ...
Based on your experience, I can see why you think that.
Unfortunately, it is still anecdotal, so it isn't a statistical
likelyhood based on your experience. I, for one,
cannot imagine doing that to a place that I used to like living in.
It's not like the buyer did anything to me, but that might just be me.
Quote:
Originally Posted by tumbleweed118
... As far as buying a home that has been
destroyed by the tenant prior to eviction, ...
This thread doesn't have anything to do with this situation.
I can understand looking for such places to fix them up,
but this thread is about a perfectly fine home with a
tenent that needs to leave - hopefully peacefully.
Based on your experience, I can see why you think that.
Unfortunately, it is still anecdotal, so it isn't a statistical
likelyhood based on your experience. I, for one,
cannot imagine doing that to a place that I used to like living in.
It's not like the buyer did anything to me, but that might just be me.
This thread doesn't have anything to do with this situation.
I can understand looking for such places to fix them up,
but this thread is about a perfectly fine home with a
tenent that needs to leave - hopefully peacefully.
You are right, my friend, I should not have posted that property destruction is typical without having statistical data to prove my point. Although, as you may be aware, statistics can be skewed to say whatever you want them to say. Just saying. However, I will be more careful in throwing information out there, even if it is for your benefit.
Also, this thread does somewhat apply to purchasing a home that has the potential for damage. Myself, as well as the person that originally posted, are trying to purchase a Freddie Mac foreclosure. If we choose to purchase the property with the tenant still living in it, there is the potential that the tenant will destroy the property when we proceed with the eviction.
There are many that are seeking to purchase one of these foreclosures without having a great deal of knowledge about the potential risks involved. I was simply trying to enlighten others that there are risks involved. For example, I have been involved in many real estate transactions throughout the years. However, this addendum from Freddie Mac, passing all liabilities on to the potential buyer is new to me. I had to contact my attorney for advice on this situation. In sharing the information that I received from my attorney, my hopes were to help others, not start a debate.
... trying to purchase a Freddie Mac foreclosure....
Not knowing anything about this sort of thing, I truly respect the amount
of knowledge one must have to purchase, shall we call it; "non-conforming-property."
Having the unknown element of a possibly hostile and forced-out tenent,
would just put way too much possible additional risk for me to imagine taking.
How would you price it? The only offer I could imagine making would be one
that assumed great destruction. If it didn't happen, then the difference
would be yours - how nice.
Not knowing anything about this sort of thing, I truly respect the amount
of knowledge one must have to purchase, shall we call it; "non-conforming-property."
Having the unknown element of a possibly hostile and forced-out tenent,
would just put way too much possible additional risk for me to imagine taking.
How would you price it? The only offer I could imagine making would be one
that assumed great destruction. If it didn't happen, then the difference
would be yours - how nice.
In my particular case, the house I am seeking to purchase was priced $150,000 below average market value. The land value alone is worth what I am paying for this property, so I am not concerned about what this tenant may do to the home. The property that this home is situated on is in a very desirable area and even if I have to rebuild the house, the land value gives this property its worth.
However, with that being said, I am still not willing to proceed with this sale unless the seller is willing to evict this tenant before I take possession. In speaking with my attorney-real estate attorney-he told me that I have a very good chance of getting a jury to evict this tenant should it go to jury trial. On the flip side, my attorney also informed me that the jury may side with this tenant; in which case I would become a landlord, rather than a homeowner.
Furthermore, my attorney informed me that because of our current economic state in this country, he is somewhat fearful that we would get a jury that would side with this tenant. With that being said, I could not agree with you more, this is too big of a risk for me. I am not looking to flip this property. My intentions are to live on this property and a tenant just does not fit my agenda.
Just to give an update on the situation, the tenant has refused to allow me into the home to do the home inspection. Apparently, Freddie Mac has a rental company that takes care of all the foreclosed tenant occupied properties. The rental company is supposed to send out a letter notifying the tenant of his/her obligations per the contract.
Also, I have been informed that the tenant has refused the Cash for Keys offer made by Freddie Mac. The next step-according to my realtor-is for either the rental company or Freddie Mac to start the eviction process; my realtor was not specific as to which one of these entities would be moving forward with that process. However, he did ensure me that efforts are being made to evict. I will update when I get more news.
Glad you asked the seller to evict or this would be on your shoulders.
As far as tenants/former owners trashing the place, I would have to say based on my viewing a lot of REO properties that the more expensive the house the less likely to be vandalized/trashed. Not 100% of the time, but on I noticed a lot more destruction in the less than $150K priced properties. The neglect was also a huge issue with leaky plumbing and holes in the roof that have probably been there for years causing wood rot and mold.
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Not Your Typical Tenant
