With three circa 2007 loans totaling $2,281,000 in debt, this past May the “magnificent Mediterranean home…located on one of the most sought after blocks in San Francisco” was foreclosed upon with a winning bid of $183,203 on the courthouse steps.
Keep in mind, however, that it was the third mortgage that was foreclosing and first (which was in default with $1,823,927 due) and second ($350,000) mortgages still exist.
All that being said, the three-bedroom Marina home just been listed for $2,595,000 while noting “[on] the market for the first time in almost 30 years!”
∙ Listing: 196 Avila (3/3) – $2,595,000 [MLS]
∙ Failing Grades In Auction Buying 101 (And Commenting) [SocketSite]
Slightly different, but in rural arid areas of the Western US the water and mineral rights to a property are quite often entirely separate from the grazing and building rights. I saw one situation where someone started building their home only to find that they couldn’t connect the plumbing to any source of fresh water because they couldn’t secure a permit for a well. Usually people never get that far before realizing what’s going on, but it’s easy to see how someone unfamiliar with the process could get caught. Nothing unscrupulous about it, but people need to know the limits of their knowledge.
Anyone know the situation here? By acquiring the third mortgage, did this investor automatically inherit the first two liens? If so, are they looking at an unconventional flip with a quick sale at asking to pay off the first two loans? Seems like a mighty risky bet to me, but I guess that’s why I don’t rake in the big bucks.
“Anyone know the situation here? By acquiring the third mortgage, did this investor automatically inherit the first two liens?”
Yes, if the third mortgage is the only one to foreclose, then the first two mortgages still survive. The purchase was subject to the first two loans, and it is an unconventional flip.
I guess the return on equity could be substantial — e.g. if you subtract transaction costs from a sale at asking, you get a pretty good return on $183K. The question is whether they are just defaulting on the other two loans in the meantime or actually paying them.
big risk.
if the new owner can get his/her asking price, they make a quick 200k.
however, seems like a very risky deal to me in this market.
but reward is proportional to risk, and this will help clear the market so best of luck to them, and if they wipe out then someone else can buy cheaper in the future.
The list price for 196 Avila has just been reduced $200,000, now asking $2,395,000.
The list price for 196 Avila has just been reduced $300,000, now asking $2,095,000 (see: “Winning” On Avila).