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Cashing Out On Forclousure

By Terri King

Services for Real Estate Pros with HQA

April 23, 2007 01:09 PM

In Georgia, can the buyer get cash out of a bank owned property. For example, Bank sell for 150,000 and property appraise for 200,000. Buyer wants cash out of 30k. Is this possible. What is Georgia law on this transaction?

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Bre Heller

JP Morgan Chase - Orlando, FL

Terri,

Anything these days seems possible, but in my experience...what you're asking for is not possible with traditional banks.

A mortgage loan is always based off the LOWER of the sales price or appraised value.

i.e. If the bank is selling the home for $150,000...your loan amount will be based off of that dollar amount.

If you don't have money to put down, you're looking at financing 100% of the purchase price.

By asking to cash out $30,000 at closing...you are essentially financing more than you're purchasing the home for...120% LTV.

If this is for the purchase of an investment home, I don't think you're going to find a bank willing to do this.

What you can do is purchase the property at the low price of $150,000, wait a few months...then take out an Equity Loan based off the appraised value.

On a side note...Real estate transactions that provide cash out to buyers before they have a significant "vested interest" in the property are being heavily scrutinized. The last thing a Lender wants to do is provide 100% financing to someone AND give them $30,000 cash out before ever making a payment. That is a very high risk loan that has resulted in serious complications in the GA market over the last 4 years.

Apr 23, 2007 01:26 PM

Terri King

HQA - Lithonia, GA

Thank you for the info

Apr 30, 2007 02:03 PM

Fred Griffin Florida Real Estate

Fred Griffin Real Estate - Tallahassee, FL

Licensed Florida Real Estate Broker

Welcome to ActiveRain! Please take another look at the website, we look forward to your blogs. Thank you!

Jun 03, 2015 01:42 PM