The House Down The Street

This is something that I hear quite often.  “Can you check on the house at 123 Smith St and see what’s going on with it?” 

Normally, our fictitious buyer has seen this home while driving through a community that they would like to purchase in (sometimes it’s my relatives/friends/past clients trying to pick up a piece of investment property).  It appears abandoned and many times already has notices posted indicating it’s in the process of foreclosure (for another angle on buying short sales and foreclosures follow the link). 

For the most part, our example buyer will have a tough time trying to purchase this “house down the street.”

Why?  You ask…

The 4 Most Common Reasons:

  1. The owner has stopped paying their mortgage.  They owe more than the home is worth and they’re either unwilling or unable to complete a short sale.

    • An example of an unwilling owner.  If they have plenty of money to pay the difference but are choosing to let the property go.  The owner would assume their lender would be  unwilling  to let them sell the property as a short sale and would not make any effort to get the property sold before foreclosure.


    • Another example.  The owner has already moved from the home and the emotional weight of trying to go through the short sale has rendered them  unable  to jump through the necessary hoops. 
  2. The bank that holds the lien is having problems locating the proper paperwork to perform the remaining steps in the foreclosure process. 

  3. The bank has already foreclosed on the property but can’t sell it yet. 

    • Just because Wells Fargo (or any other lender) is servicing the loan, does not necessarily mean they “own the loan.”  Most of the time a mortgage is packaged and sold off as a mortgage backed security.  After foreclosing on the property the bank may have to sort through who all is owed money as a result of the foreclosure.  Basically, get their ducks in a row.



  4. The bank has already foreclosed and simply isn’t ready to sell yet.

    • Sometimes I think potential buyers imagine an asset management process that is far removed from reality.  E.G.  A few people sitting around the office talking about the latest property that they’re putting on the market. 
    • Reality = The foreclosure market is dominated by large national (and even international) banks and lending institutions.  This means that they’re not only dealing with thousands of foreclosures but 100’s of different cities where they’re located.  So, the employee in charge of the foreclosure in Jacksonville may also have properties in Nevada they are dealing with.  On top of that, they have a system that probably allows them to process 30, 40, maybe 50 properties per month.  So, asking them to step outside of their process and pay attention to a property that isn’t their responsibility is probably not going to be well received. 

All of that to say this. 

If the home is not on the market and falls in to one of the above categories… The chances of purchasing are probably 1 in 30 at best.

It’s not to say that it can’t be done, but I would encourage you to understand the factors that are at play.  In most cases your time and energy spent focusing on sellers who do actually want to sell is a much better investment. 

To sum it up.  Just because it’s vacant, ugly, or in foreclosure does not mean that the seller is motivated to sell.

If you’re in the hunt for a home – check out:

Jacksonville Real Estate Listings

Short Sales


In part 2 of “The house down the street” I’m going to give you some online tools to use for finding information on those vacant properties.