Saturday, July 26, 2008 at 11:04AM
Trustee Sale - Case Study
We saw earlier this week that trustee sales/foreclosures aren't for the faint of heart.
Here's another example of what's happening - heard from the tenant living in this home.
There was a 3 br/2.5 ba, 1,743 sf townhouse in the Bellarado complex that went to auction on Thursday. The amount owed was $336,185, and the owner made no attempt to sell, he just went down with the ship.
Here are the three most-recent sales:
1,682 sf $480,000 5/08
1,682 sf $460,000 6/08
1,648 sf $465,000 7/08
So this is a great candidate for a cash-buyer to grab at the trustee sale, and make a six-figure gain, potentially. But you'd still check it out closely ahead of time, right?
The tenant never heard from the new owner until 5pm the day of the sale, after they had already given up their $337,877 (there were no other bdders). They made no attempt to inspect the property or talk to the occupants ahead of time, they just plunked down their dough and figure out the rest later.
The new owner did offer cash for keys, but balked at the tenant's number - $4,000. But he may regret that later if the market drops in the meantime. Thanks to Arnie's new law the tenant has 60 days to vacate, and selling in October will be different than selling in July or August.
With people throwing around cash like that with no investigation, how is the regular guy going to get a break?
Jim the Realtor
17 Comments
View Printer Friendly Version
Email Article to Friend
Reader Comments (17)
Interesting post. I appreciate your perspective and circumspection. A few days ago you posted higher-end homes going to the courthouse steps for liquidation. Some of the trustee sales dates have passed; could you do an update of the opening bid amounts on those?
Are there any other liens? If the tenant does not pay rent isn't there going to be a $4K+ charge for interest, taxes, and HOA?
I'll bet the guy who plunked down 465K in July 08 feels a bit sick to his stomach about now.
After all, there's a new comp in the neighborhood!
The "regular guy" will be getting a break when these knife-catchers have had their religious experience.
Jim,
Where exactly is this property? I'm not familiar with Bellarado.
Right libertas! There are lots of "investors" believing they are getting incredible values. In time, the regular guy will buy a regular house at a regular price, i.e. something affordable.
ROFL, you mean some idiot paid $336,000 CASH for a place with no inspection, no research and a tenant and never bothered to do the due diligence at all.
Bellarado is in Torrey Highlands:
http://www.sandiego.gov/planning/community/profiles/torreyhighlands/index.shtml
Here's an update, if anybody is interested. Just after I spoke with Jim, I got a call back from the owners saying they would give me $4000 if I get out in 2 weeks. This is the amount of 60 days rent. I had told them that I would only consider an early move date if I got the $4000 plus moving expenses.
The funny thing is that they told me more or less they couldn't "afford" anything higher that that, so there was no bargaining. Yeah...wouldn't want to cut into that six-figure profit they'll make when they flip it.
I found a rental in the same complex...in fact the same model that is available right around the 60 days mark. So, I'll be perfectly happy to sit here rent-free during that time. :-)
Scott,
Rent free?? I thought the law was that the tenant needed 60 notice to vacate, not that the tenant gets 60 days free rent. Personally, I think it is unethical to stay and not pay rent.
Seeing as how I'm being evicted for somebody elses' poor decisions, no, I don't feel bad for not paying rent.
I'm being inconvenienced and the 60 days notice (which was just upped from 30 days) was specifically designed to give rights to the tenants.
Justme:
I did some more investigation and I believe you are correct, although I think I need to talk to an attorney. Somebody had given me the impression that the rent would not be due to the new owner. However, it appears a lease converts to month-to-month with the new owner.
If rent is due, then I'll be happy to pay it during the time I'm still in the residence.
Scott- Don't forget about your deposit, work something out with the new owner in writing. Sounds like it might be gone.
IMO, the deposit is like a lien on the property that the new owner wasn't made aware of. Scott is due the deposit as long as there aren't any material damages, and he should do whatever it takes to make sure he is made whole. Not his problem that the new buyers didn't do their due dilligence. It's his money, and he should not lose a single cent because of someone else's foolishness. The inconvenience of moving again -- because of the FB's inability to make their payments -- is bad enough.
Hence,my "get it in writing" with the new owner. If they expect the rent to continue per the agreement all other terms and conditions apply. I wonder what would happen if Scott could not find his rental agreement, how much was the rent?? the deposit?? only the walls know.
Another update:
I spoke with the guys and they seemed very eager to get me out ASAP. I think they're worried about the house buying season (what little of it there is) ending before they can get this back on the market. They bumped their offer to $6,000 if I'd get out in 2 weeks. Not a bad offer, but it's just really hard for us to get out that quickly. My wife is pregnant and we have a little girl. Also, as I mentioned, we found a nice place at a good rent, so we decided to just sign that lease.
They brought up nothing about rent and seemed to acknowledge on the phone that we wouldn't be paying rent for the 60 days. So, in that case, the $6,000 suddenly drops to a "profit" of $2,000 on our part, which isn't a ton of money considering we'd probably end up in a more expensive place anyways, with that $2,000 going to an increased rent.
Oh, and as for the deposit, my old owner (the one foreclosed upon) is a nice guy and promised he'd return my full deposit as well as the rent that I already paid for after the auction.
Of course, I haven't heard much from him in the past week. Then again, he was never one to quickly return phone calls.
But, I trust him, having spoken with him for the last two years and I believe he'll live up to his word eventually. He really comes across as a guy who just got caught up in all the excitement of house flipping. He told me he's had to walk away from at least one other property in Chula Vista that was underwater by $150,000. And I'm pretty sure he has a few others that he's probably walking away from too.