Help!! with this Vendor Finance deal

the situation is like a Mortgage Repossession:
The property was in litigation since 2009 and it just came of the litigation in october 2012. Because it was in litigation the owner did not have to pay any payments to the bank during the litigation period.
Now the property is in the possession of the bank but the bank is letting the owner/people stay for certain period upto Jan 2013. The bank has also instructed the people to sell it and they are trying to sell it @$250k since 1.5 yr and hasn't been sold.
Obviously, Bank wants its money atleast now as it's been sitting on their books since 2009 as Non-Performing Asset. I am thinking the Bank would be flexible to negotiate to get the property of its Books rather than carry it much forward.

Lot size - 3188sqm
Just the Land Value - $49k
The property is worth around $210k (according to RP and they have given a range up to $230k)
Bank wants $200k to discharge the mortgage.

I was thinking to Vendor finance the deposit to the coming in buyer and the buyer gets the other part as a loan from their lender.

What do you think is best to do in this scenario -
I should first option the property and then go to the Bank and negotiate?
Or
I should get a "Deed of priority"/"power of attorney" and then go to the Bank and negotiate?
Or
I should mention in my Option contract with the seller that whatever the Bank charges to discharge the mortgage I will agree that price.

Any suggestions for this are very much appreciated...

tx
 
the situation is like a Mortgage Repossession:
The property was in litigation since 2009 and it just came of the litigation in october 2012. Because it was in litigation the owner did not have to pay any payments to the bank during the litigation period.
Now the property is in the possession of the bank but the bank is letting the owner/people stay for certain period upto Jan 2013. The bank has also instructed the people to sell it and they are trying to sell it @$250k since 1.5 yr and hasn't been sold.
Obviously, Bank wants its money atleast now as it's been sitting on their books since 2009 as Non-Performing Asset. I am thinking the Bank would be flexible to negotiate to get the property of its Books rather than carry it much forward.

Lot size - 3188sqm
Just the Land Value - $49k
The property is worth around $210k (according to RP and they have given a range up to $230k)
Bank wants $200k to discharge the mortgage.

I was thinking to Vendor finance the deposit to the coming in buyer and the buyer gets the other part as a loan from their lender.

What do you think is best to do in this scenario -
I should first option the property and then go to the Bank and negotiate?
Or
I should get a "Deed of priority"/"power of attorney" and then go to the Bank and negotiate?
Or
I should mention in my Option contract with the seller that whatever the Bank charges to discharge the mortgage I will agree that price.

Any suggestions for this are very much appreciated...

tx
200k the bank wants to release the mortgage 210 is not enough beef in the property

and have the owners tried to sell at 210 according to rpdata it's overpriced by 40k

banks generally don't do deals with the general public I would wait until jan 2013 and if the bank takes the property then go from there.

sounds messy otherwise why would the vendor agree to sell to you at 200k when they have not reduced the price according to the market.
 
Bank wants $200k to discharge the mortgage.
The bank wants a fair market value. Which is determined by a valuer.

In many cases, when a property has gone to a mortgagee it is usually due to the vendors borrowing against the property. It’s very rare we sell these properties for more then what is owed. This amount is irrelevant to the bank.
 
How would you approach the Bank

If a property is in possession with the Bank and you want to buy it.
How/who would you approach the Bank?

Thanks
 
If a property is in possession with the Bank and you want to buy it.
How/who would you approach the Bank?

Thanks
The bank would be using an agent to sell the property. First point of call would be the agent. Finer details may be through the bank's lawyers.
 
If a property is in possession with the Bank and you want to buy it.
How/who would you approach the Bank?

Thanks
The bank usually employs a third party to handle these matters. The third party picks the agent and method of sale (usually auction). So in most cases, going directly to the bank may be futile.
 
Hi Pav

I'm not sure how much vendor finance experience you've got but I'd suggest:
1. As soon as you hear that a lender has received a writ of possession you move onto the next transaction (unless you want to buy it via mortgagee auction) and
2. Assumptive Joint Ventures (AJV's) are an advanced strategy, i.e. ensure you have quite a high level of VF experience before you try one and, if you don't have a lot of experience and come across a potential AJV, do it with an experienced vendor financier who has experience with AJV's.

Cheers, Paul
 
I hate to burst your bubble, but I have never had a bank begin negotiations prior to putting the home on the market. There may be exceptions which I haven’t heard about?

They need to “gauge” the market and collect general feedback from buyers before they accept any offer. Again, from personal experience, it is even rare for them to accept an offer prior to auction. The last thing they need is for the previous owner to come back saying the bank under sold the property.The bank still have due diligence in achieving a fair market value.

Maybe you need to make the current owners aware of the massive loss they will suffer if the property is sold via the mortgagee. The difference between selling the home through an agent and selling via mortgagee is going to be around $20,000. If the mortgagee grabs it they will face several issues:

1.The stigma of a mortgagee. Most buyers expect to get the property cheap. Once they have this mind frame it can be hard to negotiate a fair price. At the end of the day, the bank will look at the highest offer. If this offer is too low they get the property re-valued. The valuer usually comes to the party and values the home at the current offer.

2.The vendor will incur penalty/default rates
3.The mortgagee employs the service of a third party to choose the agent. They have to pay them + the agent. These costs are eventually paid by the previous owner

4.The mortgagee usually employs “city” solicitors who charge $1000 an hour. These costs are paid by the previous owner

5.The property needs to be cleaned prior to marketing + maintained. Another cost for the owner.
 
4.The mortgagee usually employs “city” solicitors who charge $1000 an hour. These costs are paid by the previous owner
This is a bit of an exaggeration:eek:

It would be no where near this amount. But if the mortgagee wouldn't be really concerned about being cost effective as all they want to do is to recover their money.
 
This is a bit of an exaggeration:eek:

It would be no where near this amount. But if the mortgagee wouldn't be really concerned about being cost effective as all they want to do is to recover their money.
Yeah it was an exaggeration. But the solicitors they use always seem to charge well above the average. All these costs are put on the previous owners tab.
 
Yeah it was an exaggeration. But the solicitors they use always seem to charge well above the average. All these costs are put on the previous owners tab.
Agreed.

I expect they would charge $00-500 an hour and as the client (bank) is paying for it they won't go light on their bill.
 
Ever heard of 'panel solicitors' - I have had my clients previously have an established panel of solicitors who would still have to put forward a quote (of sorts) for the conveyancing works.
 
Yeah it was an exaggeration. But the solicitors they use always seem to charge well above the average. All these costs are put on the previous owners tab.
Of course. It's just like liquidators' charge out rates. The creditors will get nothing anyway and the liquidator gets paid first so they charge like a wounded bull.
 
Hi Pav

I'm not sure how much vendor finance experience you've got but I'd suggest:
1. As soon as you hear that a lender has received a writ of possession you move onto the next transaction (unless you want to buy it via mortgagee auction) and
2. Assumptive Joint Ventures (AJV's) are an advanced strategy, i.e. ensure you have quite a high level of VF experience before you try one and, if you don't have a lot of experience and come across a potential AJV, do it with an experienced vendor financier who has experience with AJV's.

Cheers, Paul
Paul, would you mind looking at the Commercial tread, and commenting on the situation where a buyer of a vendor finance deal is now in the situation where the vendor is a bankrupt, and they have lost their contributions.
 
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