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$6,000 Profit on My First Bank Foreclosure

by Paul Gilbert, Flint, Michigan   

Many people say that you can't make a dollar on every deal, but my very first deal proves them wrong. I was a new real estate investor with nothing but ambition when I found this beautiful new home in an affluent suburb of my county. The home was built by a local builder who was unable to sell the home and the bank foreclosed.

When I saw the notice in the paper, I went to look at the home and immediately realized that the builder owed much more than the home would ever sell for. So I threw the papers in the car and wrote it off as a dead prospect.

Then, as I was pulling out the driveway, I saw an elderly man approaching the house and decided to ask him if he knew why the builder couldn't sell the home. It turned out the man was the builder's father.

He explained to me that the original lot was purchased from a local doctor who wanted an additional $1,500 for a 16' x 140' strip of land (for which the builder refused to pay). Once it was discovered that the home was built 6' over the property line. The builder was then unable to get a clear title to sell the home and the bank foreclosed.

So later that day, I contacted the doctor and asked if he would sell me that strip of land for the same price. He gladly agreed, and we closed the deal several weeks later.

About 30 days later, a local real estate broker, who was representing the bank, contacted me and asked if I was interested in selling the land. I immediately replied: "Yes sir I would--for $10,000!" After a long pause, the broker said he would get back with me if his client was interested.

To make a long story short: I knew it would cost the bank about $12,000 to move the foundation and the house. So after a few weeks of negotiations, I agreed to sell the strip of useless land for $7,500. Ten days later we closed, and I put the $6,000 profit in my pocket. Not a bad return on my first deal huh?

 
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