by Sidney A. Pashkow
© 06/01 Foreclosure News of NJ, Inc.

Do you hang up the towel when you are not successful the first time around? Marriages, sports and real estate rank in the top of these wash outs.

Several years ago, I needed to purchase a home instead of collecting worthless rent receipt's.

After following the Sheriff's foreclosure advertisements in my local newspaper for over six months, I was able to find a single family house in a great residential area, with a great location relative to schools, shopping and major highways. It also was just a mile to the ocean beaches and there were three public county golf courses within ten miles. It was perfect.

I had little time to do the necessary research before the scheduled auction date. I scrapped all other projects, including taking off from my full time work. I found a foreclosure I valued at $200,000. It had a defaulted first mortgage of $157,000. A second mortgage of $97,000. An IRS lien in excess of $100,000. Over $354,000 of liens total.

I was sure that the bidding would be lively, especially from the second mortgage holder. I also thought that the IRS would stick it's ugly head into the business and sink the whole deal.

I forged ahead. I called the attorney for the foreclosing bank, armed with the information I had researched at the County Hall of Records, and other sources. I wanted to make a deal. Plaintiff's Attorneys are some times not as cooperative as I anticipated. Their job was to foreclose, not be a buyers broker.

Then I contacted the first mortgage holders office. After about a dozen calls, I was told that they had not decided what their strategy would be. The last market appraisals were late in arriving at their offices.

I emphatically explained that the foreclosure auction was scheduled in just three days. It made no difference to them, they had to do things according to their regulations. A postponement of the Sheriff's auction, for them, was just an easy phone call!

I demanded to speak to the Officer in charge of the department. It took more time consuming phone calls, disconnects and hang ups. Finally I got a response from the person in the department who was handling this foreclosure. He referred me back to their attorney.

I was on the merry go round.

One dozen calls later, I finally got to the Vice President "in charge". He stated that they were going to bid the actual amount that was owed on the first mortgage including all other charges at the Sheriff's Sale. They were not going to make any kind of a deal with me. (So they thought.)

Finally I was able to speak to the President of the bank. He informed me that in order to consider any offer I had in mind, I should reduce my words to paper, make an offer, with an earnest money check to prove my sincerity and address it directly to him.

Time was running out. Now there was only one day left to go before the Sheriffs auction. I knew that the bank could not make a deal with me until they owned the property, after the auction. I decided to bid at the auction.
The next day I prepared myself for the auction with cashier checks and was able to secure a quick title report regarding all valid liens. I was prepared to bid up to $175,000. I really wanted this house and foolishly was willing to pay top dollar. That is the mistake most of us make out of sheer frustration. Not a good way to do business, especially at this level.

The auction went off as scheduled. There was no delay. The bank opened the bidding at $100. There were other bidders and now the price was up to $97,000. I believed this was the second mortgage holder who was presumably trying to protect their position.

The bank then bid $110,000. There was silence. I was going to bid $111,000. and something stopped me.

There was a fly in the ointment. I didn't want to say a word.

IRS, IRS, IRS kept resounding in my brain. Stop. Don't say a word.

The Sheriff called, "Any more bidders..........................going once, twice, Sold!" It was over. I had not bid. The IRS lien had stopped me.

Plan two would have to go into effect.

It was only a half a block to my attorneys office. I advised him as to what had occurred. I wanted him to write an offer to purchase, from the bank, the property that they had just bid on for $111,000. One thousand dollars more than they had bid at the auction. Only two conditions to my offer. One was that the home would have to be inspected by the township and a Certificate of Occupancy would have to be delivered to me. All expenses regarding repairs and replacements would be at the banks expense. Second, we would occupy the home as a renter at $400 per month for a period of not less than four months or until the IRS lien expired (180 days). Then we would complete the transaction and close.

The following morning at five o'clock I left my residence and drove to the bank in Long Island. It was about 8:30 AM when I arrived. The security guards would not let me in with out an appointment listed on their schedule.

I decided to have a cup of coffee. I observed hundreds of bank employees entering the back of the building with their coffee, donuts and brief cases under arm rushing to their offices and posts. I joined them. The security guard at the rear entrance was more interested in sipping his refreshments. In I walked, as one of them. It was a snap.
I was comfortably seated in the waiting room of the bank Presidents office at precisely 9: AM. He was on time and so was I. After introducing myself explaining my deal and frustrations with his inept co-workers, I handed him the offer and my earnest money "certified check". It only took a few minutes for him to make a few phone calls, approve the deal, sign the offer form and shake my hand. I was out of there by 9:30 AM with a deal in my pocket.

Not all deals are as "easy" as this to pull of. Many are much harder to do, especially when you have that many "No's".

Incidentally, the bank had to purchase and install a new heating system, hot water heater, refrigerator, washing machine and dryer. They also had to pay for treatment of some creepy crawly insects pest's. My estimate is that they netted $90,000. after my expenses and the real estate brokers commission. Yes, they employed one to handle matters locally. The saga, of course, continued for the next 6 months. The Real Estate agent was trying to make another sale, the bank didn't want to finance (I went elsewhere) anything to get out of the deal...But the contract was solid. I eventually closed with clear title after the IRS lien expired.

Good deals are not easy to find. When you do, don't take no for an answer. The second time or the third or the fourth time around is so much sweeter.