One Profitable Foreclosure

I was contacted by a very nice lady who is unhappy with her neighborhood and wants to move.  She informed me of what she paid for her home (120k) and that she put about 20k into it in upgrades.  Unfortunately, the area market will only support a price of 60k for her to be able to sell.  It's sad but true.  So, I informed her I would not be marketing her home for 140k and we would touch base down the road.  She told me to stop next door because her neighbor is delinquent on his mortgage and might want to list as a short sale. 

I popped next door and introduced myself and told him what his neighbor said.  His response Floored Me.

"Well, im just gonna let the bank have the house back.  I bought it for 50k 7 years ago.  It has a sinkhole and I got a 75k payout.  during the hight of the market I refinanced for 120k and that is the note I am defaulting on."  I explained that the short sale would be better for his credit and it would help him avoid foreclosure.  This guy had all the answers....he said: " The way I look at it...I was given the house for 25k  and then re-sold it to the bank for 120k (cash out-refi) so I made 145k off the house"  I can go and buy another home cash, homestead it and just file for Bankruptcy after the foreclosure goes through."

In my mind I kept trying to figure out if Mike Ferry had a good rebuttal for this but I was on my own so I said....Well, are you working with a Realtor to find your next home?  "no" I would be happy to show you any home your interested in.  What are you looking fo rin a house?  Heres the best part, he still has 120k of the money in an account ready to buy another house.  We are shopping homes this afternoon.  Right now he can spend 50-60k on a comperable home to his previous one and still have a few bucks in the bank. 

I do not reccomend anyone look at a foreclosure situation in this way.  Foreclosure and Bankruptcy are Not Good things.  He might have a home free and clear in 60 days but the damage to his credit will be catastrophic and take a good while to repair.  Before you make a decision on what to do with your home Please, Please, Please call a Realtor(R) to discuss your options.

THE PROFITABILITY OF THIS HOUSE IS IN THE HOMEOWNERS EYES NOT MINE.  THIS IS NOT A WIN-WIN IN ANYONES BOOK.