Tuesday, February 15, 2005

House 6

I found a nice house in Phoenix that is a preforeclosure. It's scheduled to go to auction next Friday (just 10 days!). I checked the place out yesterday afternoon and faxed in an offer about 45 minutes later. I specified the deadline for a response was noon today. Due to the impending auction, we need to move fast on this one.

When I first found the property, I called the listing agent and reached her right away. I got some basic info and then visited the place myself. After that however, I have had no luck at all reaching anyone. The main office number is answered by voicemail and the cell phone number given on the message also rings through to voicemail. I've left messages at both places and no one is returning my call.

The property is a SFH that was used as a rental property. It's in fairly decent shape, but there is some work that needs to be done. At first I was super excited about the property because it looked like there was a good amount of equity. However, I later discovered a second mortgage that I overlooked. There's still enough room to make it a good deal for me and, given the timeframe involved, I should be able to get this at a decent discount. Assuming, of course, someone returns my phone calls.


Justin H said...

So do you just find out balance and existance of 1st, 2nd, 3rd mortgages on properties by doing a title search? I know you said in another post that they are relatively inexpensive but if it's a regular and important part of research it can add up. I understand if you do alot of business with a particular title agency, they may do it for free but what about when you are beginning and doing a lot of research on many properties that lead no where? Title searches can add up...

Shaun said...

As I said in another comment, title searches can be free and can be done yourself. It's really easy if your County Recorder has their records online. Loan docs never say "first mortgage", "second mortgage," etc. What matters is the date and time they were recorded with the county recorder. The one recorded first is the first mortgage, the one recorded second, is the second mortgage, etc.

As for finding out the remaining balance, you'll need to guesstimate or generate an amortization table. (There are lots of free amortization calculators available on the internets.) If the loan was opened one or two years ago, most all of the loan amount will still be due. This is because in the first years of a loan, almost all the payments go towards interest. If the loan was opened 10 years ago and it was a 30 year loan, you can use an amortization table to get an idea of how big the remaining balance is. The recorded doc will list the loan amount, length of the loan, and interest rate. That is enough information to generate an amortization table. From that table, you can look up the outstanding balance 10 years into a 30 year loan. The actual amount will be slightly different because, with foreclosures, the borrowers will have missed payments and penalties will have accrued, but you can get a close enough idea with this method.

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