How I Saved a VA Seller From Foreclosure

How I Saved a VA Seller From Foreclosure

One of my clients was contacted by a distressed VA seller who was behind on payments and facing a pending foreclosure. It turns out that my client and the seller could not come to agreement on price, since the seller owed the lender close to $700,000 and my client would not be willing to offer that much. My client forwarded the seller’s contact to me, to see if I can help. I stopped by the house, which is in the desirable neighborhood of Mililani in Central Oahu. Below is a video when I first saw the house.

After some research, I discovered that the seller lives on the mainland and has been behind on both his mortgage payments and HOA payments for almost a year. The house has been vacant for about the same time, since he left due to active duty military orders. Because he was not in a position to get current on the payments nor pay for any repairs, the house was in need of TLC before we could list it on the MLS. 

 

If you are facing foreclosure, you are not alone. Here’s a link to some helpful resources.

 

Preparing the home for sale

Although it was risky, I decided to come out of pocket to pay for the repairs, landscaping, and cleaning needed to bring it to a retail condition. Below is a before picture of the side yard, with tall grass growing through the AC and windows. I spent a Saturday with my handsaw to trim the grass.

Overgrown grass on the side yard was one reason this property wasn't selling.

Here is a picture after several hours of swimming through tall grass:

I then hired several people to help me with the rest of the landscaping and removal of green waste. To make things harder, the neighbors had stolen both the grey and green waste bins. So, we had to make many runs to the dump to dispose of the year’s worth of green waste that had been piling up. 

 

There were some other repairs that had to be done such as missing window jalousies, a happy face that was painted on one of the doors, and inoperable garbage disposal. The pool had turned green from a year’s worth of neglect, and there was a lot of debris floating in there. After many hours of work cleaning the interior and power-washing the pool and exterior, and a bill of about $5500, we were able to restore the house to a suitable-for-MLS condition, as shown in the video below.

Pricing and Outcome

As for pricing, we decided to list it at $740,000, which was the minimum amount needed to pay off all of the seller’s obligations. We were under pressure from the bank, who had sent a representative out to prepare for the foreclosure.  Fortunately, with the proper pricing, cleaning, and professional photography, we received 10 showing requests within a few days, 2 offers, and went under contract within 3 days on market. The offer was for $770,000, with an escrow period of 30 days, which was ideal, since every additional day on market meant additional interest charged to the seller.  

After cleaning out the pool, the house is now more suited for most buyers.

After the buyer’s inspection, they found issues with the house, which wasn’t unexpected, given the deferred maintenance. We settled on a purchase price of $760,000, affording the sellers a decent profit. This was one of my most rewarding experiences as an agent, since I was able to change the financial trajectory of the seller from potentially being foreclosed on to receiving a net profit and avoiding a huge ding on their credit.  

 

If you are facing issues with falling behind on payments, please contact me!

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