# Short Sale with owners in bankrupt.



## lemon (Jul 9, 2012)

There is a house up the road that has been sitting empty for over a year. Got curious and called the owner. It was thier first house 30 years ago and has been a rental house since then. They have filled for bakruptcy and she said that it won't be done till next year? They stopped paying the loan on the house and were just going to let it go to the bank. She said the last appraisel on it was $59 and to offer them something about there. She was going to call the attorney and ask about me buying it short sale, who was in charge of the house and that sort of stuff. I'm going to see if I can find the lean holders at the courthouse and how much they owe, but is it even worth doing. How does the owner not paying and being in bankruptcy affect this senerio?


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## cindy-e (Feb 14, 2008)

oh man. I typed up a very long answer and it got lost out in cyber space somewhere. we're doing it. it is a long process... 6 to 9 months. have an inspection to be sure you are getting a sound property. be sure you are getting a very good deal 'cause you will be locked into a contract all of that time. be patient. expect that it will have to go before the bankruptcy court. that is a normal part of it.

FWIW,
Cindyc.


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## PaulNKS (Jan 11, 2009)

I don't know about in a bankruptcy, but otherwise, the mortgage company has to agree to a short sale before the seller can do it. If the mortgage company doesn't agree to a short sale, the seller is out of luck and has to wait on foreclosure. With it in bankruptcy, I don't know how that gets handled. I would sure be interested to know.


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## Mironsfarm (Feb 3, 2011)

you would think with all the foreclosures happing the banks would jump all over it. i tried to short sell my house in florida for ten thousand less then what i owed and the guy had cash and the bank would not let me do it! so now i have foreclosed on it and gonna file bankruptcy next year. there lose not mine lol. try it you never know.


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## cindy-e (Feb 14, 2008)

also, don't just look at what is owed, look at assessed value. The house we are looking at, the guy owed WAY more than assessed value, but buying it for more than it is worth just wouldn't be smart. We offered assessed value because it is hard for the lien holder to argue in court that they should get more than that just because they were dumb and loaned more than that on it the first time. It's a fair deal for everybody. Hopefully the court will see it that way.

Cindyc.


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## MichelleFL (Jul 1, 2012)

cindy-e said:


> also, don't just look at what is owed, look at assessed value. The house we are looking at, the guy owed WAY more than assessed value, but buying it for more than it is worth just wouldn't be smart. We offered assessed value because it is hard for the lien holder to argue in court that they should get more than that just because they were dumb and loaned more than that on it the first time. It's a fair deal for everybody. Hopefully the court will see it that way.
> 
> Cindyc.


Unfortunately the Court has zero say in regards to short sales. Any short sale negotiations go on outside of the Court and the bank is under no obligation to agree to anything. I am a paralegal at a foreclosure firm. Lemon, what state are you in? I am assuming you are located in a state with a judicial foreclosure process and not non-judicial. I'm only work with judicial as that is how it is done here. Send me a PM if you want more help with getting info to decide if making an offer is worth while. I of course can not offer any legal advise as I'm not an attorney. But, I can give you plenty of good information about short sales and advise on working with the banks. (I work for the bank, not the homeowners)


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## MichelleFL (Jul 1, 2012)

Mironsfarm said:


> you would think with all the foreclosures happing the banks would jump all over it. i tried to short sell my house in florida for ten thousand less then what i owed and the guy had cash and the bank would not let me do it! so now i have foreclosed on it and gonna file bankruptcy next year. there lose not mine lol. try it you never know.


Yes, I totally agree. It is in the banks' best interest to go through with a short sale. The bank knows it too. Unfortunately they are too cheap/stupid to hire enough English speaking and US citizen employees to process all the short sale and loan modification requests. Most of the time you are working with some offshore moron who has no idea what they are talking about. It takes a lot of work to get connected with a useful employee at the bank. 

If the banks would hire Americans, more of the people who lended from them would have jobs and be able to afford their mortgage in the first place. It is a sad situation.


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## mekasmom (Jan 19, 2010)

You would probably get a better deal if you got it from the bank instead of the owner. The bank is just looking to get back it's losses or close to them instead of looking for a profit or the appraised value.


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## plowjockey (Aug 18, 2008)

We just purchased a short sale home, 60 days offer to close ( a miracle).

I suggest working with a real estate BUYER agent familiar with short sales.

the bank may "OK" the short sale, but they likely don't hold the mortgage, so the "investor" (Fannie Mae Freddie mac- or somebody else) has the final approval.


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## rickfrosty (Jun 19, 2008)

Mironsfarm said:


> you would think with all the foreclosures happing the banks would jump all over it. i tried to short sell my house in florida for ten thousand less then what i owed and the guy had cash and the bank would not let me do it! so now i have foreclosed on it and gonna file bankruptcy next year. there lose not mine lol. try it you never know.


Ah, you are perhaps thinking that banks operate under rules of common sense - look at the state of our nation & think again.
Just a response to the general thread, by the way .
I'm a realtor & I'll tell you that if you are not a patient person, get upset over craziness, you may not want to try a shortsale or to try to buy (REO) bank-owned property - BUT - I guess you could get lucky & run across a rational bank. There ARE some wicked-good deals ??!


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## edcopp (Oct 9, 2004)

In this case just ask the owner (who is filing BR) for a key to the house so you can go and look at it. Once you have a key just move in. Let the lawyers and clerks, and clucks, etc. etc. drag their feet all they want to. 

When all is said and done you will have lived free for a year or so. Remember you do have the key. You would be protecting the property from damage by just staying there (no charge for that service).

If the utilities are on so much the better. Send those bills to the BK lawyer.:goodjob:


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## cindy-e (Feb 14, 2008)

turns out the kind of bankruptcy also matters. turns out the one with the house we are looking at is a chapter 11... part of a business, and the business owner is still in control of the property. So, my situation will be completely different than yours.


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## old school (Aug 26, 2012)

There is always a deal out there but is it right for you? Would look to see if the taxes are paid up to date and have a title search done about 75-150 dollars. Yes also talk to the owner and ask all the questions you can they usely are open to answering. GOOD bless


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## NorthCountryWd (Oct 17, 2008)

lemon said:


> I'm going to see if I can find the lean holders at the courthouse and how much they owe, but is it even worth doing. How does the owner not paying and being in bankruptcy affect this senerio?


My story....by a shear stroke of luck, found a very nice property that was in default. Out of state owner in hospice care, no heirs, blanket loan (multiple parcels under one loan) from a Canadian bank. Looked up the deed and found the lien holder. Went back and forth with them for months before getting any info. Finally found out they would have trouble foreclosing due to the blanket loan, being a Canadian bank and state laws about foreclosure. 

Enter my attorney. He came up with the plan. It involved paying off the lien (substantially less than assessed value) and holding the money in escrow until foreclosure was complete. Each parcel had to be individually foreclosed on (by me as the lien holder) and that involved the courts in VT.

Long story short, we filed a notice of foreclosure in August of 2009 and closed last month. Back taxes, attorney fees, court fees, etc., really added up and the whole deal was on the edge of disaster the entire time.

I've been in real estate for over 20 years and ran into so many issues that I'd never heard of in this deal. If you're not a real estate attorney, then you need a very good one....period.

In the long run it was worth it, but there were many times over the past 3 years I thought I had screwed up big.

YMMV and Good luck!


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