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My husband and I are trying to purchase a foreclosure property in Brooklyn. We have done 2+ years of research on this specific foreclosure, and the end of the case is near and we would really like to avoid auction at all costs. We want to make an offer pre-auction as either a short sale or, more likely, a deed transfer, however all parties are MIA and have seemingly washed their hands of the entire proceeding.
I *know* there must be a community of professionals who specialize in these types of deals, however I can't find them. We have met with 3+ real-estate attorneys, all of whom advertized experience in foreclosures but none of them had any insight into how to get a deed transfer or short-sale moving (they all told us to call them when we were ready to draft up a deal... that's not the hard part!) I've also spoken to a number of real-estate agents who seem interested at first but then give up as soon as one of the counsel members in the case doesn't return their calls.
We are not bargain hunting or trying to low-ball any firm or individual who works with us, but the case is rather complex and will require some time. I have been going to auctions attempting to network, but buyers are sort of close-lipped about their personal resources (and, honestly, being a young-looking woman has not done me any favors.) We are prepared to go it alone, but would really rather find a team to work with us. There is a sizable amount of commission to be made with whomever can get the job done (this is not a $400k property.)
If anyone has any recommendations for real estate/legal professionals OR if you have personal experience purchasing short-sales, I would love to hear any insight anyone can offer!
I only read this forum because I plan on moving to NYC in 6 months. I have bought over 200 properties at foreclosure sales, but none in NY. But based upon what you describe the same economic dynamics almost certainly exist here on this particular property. Since you mention a short sale, I must conclude that the owner owes more on the property than it is worth, since that is the only reason there would be a short sale. This is presumably based upon your estimate of the market value and the amount owed on the foreclosing loan. If there is equity above the foreclosing loan, you, like most first timers, probably have no clue about what the owner owes on junior mortgages, tax liens and judgments. Finding professional investors is no harder than going to the sales, which you say you have already done. But unless you have the property under contract at some well below market purchase price, you have nothing to offer them, they already know about the foreclosure on that property, and every other property. Just picking a random foreclosure and trying to work out a deal is rarely productive, and not something cash buying pros do (but it is a strategy seminar types frequently sell). But if that is your route, then getting an owner and encumberance report from a title company and checking to see if a Bankruptcy has been filed should be your first steps. A Bk file will give you contact information for the debtor. The most likely outcome is that you will need to wait for the foreclosure sale to buy it, or buy it from the Bank after they take possession and list it with a Realtor.
Hi there-
Thank you for the response. The owner is under-water on the property, however we have done a fair amount of due diligence on the property and feel confident that we have a good idea of what is owed beyond the overriding mortgage (we have checked for other liens, discovered the tax liens and common-charge liens and calculated that into our potential offer.) We have been following this specific property and all related properties with the same LLCs for a number of years. We have not run a title-check yet, however that is certainly a step we plan to take as soon as we can get some sort of response from the appropriate parties.
It's worth noting that this is not a random foreclosure- we live in the unit that is currently being foreclosed upon (as renters,) and have lived there for 2.5 years. We are fairly well apprised of the situation with our neighbors, condo board, etc. which is why we are even entertaining this idea (we are not in the market to simply buy a random foreclosure.)
We have a copy of the referees report from April, which lists every party named in this case. We have approached the attorneys for both the owner (our "landlord") and the financing company (a one-man, interest-only bridge-loan company,) and have not received favorable results when we indicate that we are neither realtors nor attorneys ourselves. As far as we can tell my visiting the county clerks office and using the eCourt system, the landlord has not filed for bankruptcy. The landlord is MIA to us (his personal residence is also being foreclosed upon and I did find that he was personally served there about 6 weeks ago under that case, so he does still exist,) which is why I was hoping for recommendations in the NYC area. I know there are people who track down these types of deals for a living, and we are looking to pay someone to do exactly that.
As an aside, in your professional experience does the referee's report generally vastly deviate from the title search?
Although the term 'referee' is not familiar to me in this context, I think I can infer that said report would be accurate up until the date of the filing of the case. There could very well be additional liens that became of record after the case was filed two years ago, and that the April 2014 report would only include information on liens of record at the time of filing the case. Given that this is a non owner occupied property and the owner has stopped collecting rent, I doubt BK will be a concern. As I understand it, the owner owes more to the foreclosing private lender than the property is worth, so there is not anything else to track down. Any negotiation would need to be made with the foreclosing private lender, one could start this before the sale, but of course any purchase agreement would not be actionable till after the sale. There may be some NY law preventing such a negotiation by the lender before the sale that I do not know about. A possible but unlikely scenario is that the private lender will bid a large deficiency at sale, and you could 'steal' the property from him at that time. There may be some angle with regard to post sale redemption rights by a lessee, but I don't seem to be able to find a straight source of information on this issue of NY law. eta: I would explain to a bidder at one of the sales that I was tenant in a property being foreclosed on, was I entitled to a post sale redemption right as a lessee.
I would think that once a property is in foreclosure, that it is beyond any talk of "short sale." That ship would seem to have long since sailed. Short sales are done BEFORE a foreclosure.
The likely situation is that a bank now owns the property and your first task is to find out which bank is the owner. Then you make the bank an offer and they sell it to you or they don't.
Although the term 'referee' is not familiar to me in this context, I think I can infer that said report would be accurate up until the date of the filing of the case. There could very well be additional liens that became of record after the case was filed two years ago, and that the April 2014 report would only include information on liens of record at the time of filing the case. Given that this is a non owner occupied property and the owner has stopped collecting rent, I doubt BK will be a concern. As I understand it, the owner owes more to the foreclosing private lender than the property is worth, so there is not anything else to track down. Any negotiation would need to be made with the foreclosing private lender, one could start this before the sale, but of course any purchase agreement would not be actionable till after the sale. There may be some NY law preventing such a negotiation by the lender before the sale that I do not know about. A possible but unlikely scenario is that the private lender will bid a large deficiency at sale, and you could 'steal' the property from him at that time. There may be some angle with regard to post sale redemption rights by a lessee, but I don't seem to be able to find a straight source of information on this issue of NY law. eta: I would explain to a bidder at one of the sales that I was tenant in a property being foreclosed on, was I entitled to a post sale redemption right as a lessee.
The owner has actually NOT stopped collecting rent (that's a whole other story...)
In NYC, we can purchase the property pre-auction and pre-judgement from the landlord if both the landlord and the foreclosing entity (the finance company) agree. Both parties have to agree because the landlord technically owns the property until the auction or sale, but it has a lien on it so if we purchased it from the landlord we would assume the lien (which is double the amount of the original mortgage principal and beyond what we are willing to pay.) The point of this post was to try to find an agent and/or attorney who is more experienced in this type of situation than my husband and I are so we don't have to invest as much time as we have been researching, hunting, emailing, calling and visiting all parties involved...
I would think that once a property is in foreclosure, that it is beyond any talk of "short sale." That ship would seem to have long since sailed. Short sales are done BEFORE a foreclosure.
The likely situation is that a bank now owns the property and your first task is to find out which bank is the owner. Then you make the bank an offer and they sell it to you or they don't.
That is incorrect- the property can be sold through a private short-sale if both the owner and the lender agree OR in a deed transfer if the referee/lender agree and a judge orders it to be transferred (which has been known to happen when the owner and his/her counsel disappear.) The bank does not own the property until the time of auction or time of sale- the notice of pendency and judgement of foreclosure and/or sale puts a lien on the property which makes it difficult, but not impossible, to buy prior to auction.
Of course, we can always wait to see if the lender wants to retain the property and list it as an REO, however this is a very small firm and I've seen no indication that they have any other REOs, although they are going through 4-5 active foreclosures. This seems to bode well for us (meaning they don't want to hold on to or manage the properties they obtain,) but doesn't make it any easier to get our offers in front of the proper parties.
The point of this post was to try to find an agent and/or attorney who is more experienced in this type of situation than my husband and I are so we don't have to invest as much time as we have been researching, hunting, emailing, calling and visiting all parties involved...
The only thing an agent can help you with in this situation is preparing a short sale agreement. If you, the tenant, can't even get a hold of the owner, I don't see as how an agent can help you here, RE agents don't know squat about how foreclosures work. An attorney will not be of any help in this situation. The only help you are going to get is from the small group of investors that regularly bid at these sales. They know how the local system works, you are at their mercy, if you explain that you are a tenant in a property in foreclosure you may find one to take pity on you and give you some direction. Though based upon what you said, I think it is clear that your only path is to contact the foreclosing private lender and ask if they will sell the property to you after the foreclosure for $xxx,xxx.
That is incorrect- the property can be sold through a private short-sale if both the owner and the lender agree OR in a deed transfer if the referee/lender agree and a judge orders it to be transferred (which has been known to happen when the owner and his/her counsel disappear.) The bank does not own the property until the time of auction or time of sale- the notice of pendency and judgement of foreclosure and/or sale puts a lien on the property which makes it difficult, but not impossible, to buy prior to auction.
Of course, we can always wait to see if the lender wants to retain the property and list it as an REO, however this is a very small firm and I've seen no indication that they have any other REOs, although they are going through 4-5 active foreclosures. This seems to bode well for us (meaning they don't want to hold on to or manage the properties they obtain,) but doesn't make it any easier to get our offers in front of the proper parties.
So, you have said exactly what I did: a property is in foreclosure when the bank is deemed the new owner whether by auction or court judgement. So if you are looking to "purchase a foreclosure" you are talking about a bank-owned property.
In actuality you seem to be talking about buying something BEFORE it goes into foreclosure...a different animal.
My husband and I are trying to purchase a foreclosure property in Brooklyn. We have done 2+ years of research on this specific foreclosure, and the end of the case is near and we would really like to avoid auction at all costs. We want to make an offer pre-auction as either a short sale or, more likely, a deed transfer, however all parties are MIA and have seemingly washed their hands of the entire proceeding.
I *know* there must be a community of professionals who specialize in these types of deals, however I can't find them. We have met with 3+ real-estate attorneys, all of whom advertized experience in foreclosures but none of them had any insight into how to get a deed transfer or short-sale moving (they all told us to call them when we were ready to draft up a deal... that's not the hard part!) I've also spoken to a number of real-estate agents who seem interested at first but then give up as soon as one of the counsel members in the case doesn't return their calls.
We are not bargain hunting or trying to low-ball any firm or individual who works with us, but the case is rather complex and will require some time. I have been going to auctions attempting to network, but buyers are sort of close-lipped about their personal resources (and, honestly, being a young-looking woman has not done me any favors.) We are prepared to go it alone, but would really rather find a team to work with us. There is a sizable amount of commission to be made with whomever can get the job done (this is not a $400k property.)
If anyone has any recommendations for real estate/legal professionals OR if you have personal experience purchasing short-sales, I would love to hear any insight anyone can offer!
I have bought a property in Nassau county back in 2008 which was in short sale. Here is what i learned:
Find out how many Lien are against this property. In my case the owner took 2 loan against his property (regular mortgage & HELOC).
You will have to proceed only after bank approves the sale price which may take months. In my case it took 3 months for the banks to approve the sale.
Once the bank approve the sale, you will have short time to close the deal. I had to deal with 2 banks, 1st bank approved the sale & gave me 3 weeks to close but I had to wait for the 2nd bank approval, by the time I got approval from 2nd bank, I had only 8 days left from 1st bank closing time. Fortunately, I was prepared for this kind of situation, so I proceeded with buying the house in cash.
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