Someone please help me!
I had no idea what short sale was till today. I found a property that had been abandoned, fixing to go up for a tax sale in a couple of months. I was going to have the owner quit deed the property to me, and she agreed. I had a title search done by a title company and they are ready to issue the title insurance to me as soon as they got the quit deed back, because the search came back clean.
The day before she was to sign the quit deed, the mortgage company calls her and tells her quit deed is not the best way for her since she owes a mortgage. She informs them of what we have been discussing, and the mortgage company wanted to talk to me. I talked to them today, they told me that they offered her $500 (for some reason) that she could get at closing, and told me I needed to buy the property through a short sale. I told him I wasn’t an investor, had heard the term, but didn’t know how to do it. I started looking and found the TCI site, and you seem to be extremely knowledgeable, therefore asking, no begging you for your help.
The property is over 1000 days in arrears and was abandoned about 5 years ago, and they have not foreclosed nor do they have a lien or mortgage recorded on the property in the county of the property. I have no clue what I need to do to complete a package. I have printed a couple of posts that has “What Steps Do I Take to Complete a Successful Short Sale” and another one that tells me how it works. I don’t know the mortgage on the property but I think it’s about 110,000 and comps in the area are about 117,000. The house needs a lot of work, water damage, broken water pipes, leaking roof, lots of mold. We are estimating 30-50 thousand in repairs and 15,000 in back taxes and IRS tax liens. I told the mortgage company that I was going to pay the 15000 in taxes in liens, in exchange for her signing the quit deed to me. Now that the mortgage company offered her some money, and she wants to get what she can.
Can someone please help me out in a short notice deal that I can work out? Any letters, forms, contracts, or comments or suggestions you could send me would be greatly appreciated.
Thanks
Tim
[ Edited by joel on Date 06/18/2003 ]
Tim! This is just an opinion.
What you should probably do is several things in the following sequence.
1.Have control over the property -by having the owner deed you the property for what she owes on it. Since you mentioned the bank is going to offer her$500, you should convince($) her she should do it with you.
2.Once you have the control, You contact
the bank to tell you the balance and to offer them what you are willing to pay
3.Contact IRS to release the lien since you now own the property
4.Of course the property tax that you know
about you plan on paying it before all the tax,interest and the associated cost drives the deal out of control.
5.Make sure there are no other liens you have to deal with ...
I think this will help a little as to start somewhere .
Keep us posted.
Good Luck!
ddawa
Tim,
If you think this is a good deal (do the numbers work?) and you're afraid of losing it, try to get it under some sort of contract. A straight option would be best. Use a purchase contract with contingencies (exit clauses) if you have to. This gives you control of the property because you have it under contract.
DO NOT HAVE A QUIT CLAIM SIGNED OVER TO YOU BEFORE YOU DO SOME INVESTIGATION ON THIS PURCHASE. Sorry for the caps, but this is very important. This deal smells VERY fishy from the details given. A QC will give you ownership with a the problems that a currently with the house (all liens, mortgages, back taxes, etc.).
Just have a QC on a property won't give you access to any mortgages/liens against the property. You'll have to have written permission from the borrower to speak directly to the bank regarding their mortgages/loans, etc.
You can bet money that the IRS is NOT going to release their lien simply because the property was QCed to somebody else. They WILL collect their money or foreclose on the property regardless who owns it.
The only point that I agree with ddawa on is to make sure that there is nothing else against the property.
A few points here. First, this mortgage company sounds very strange. IF they have a lien against the property, they wouldn't give the homeowner any money, they would FORECLOSE. If there is no lien recorded against the property, it probably isn't there or isn't legal (check with an attorney on this).
Second, all liens/mortgages can be negotiated down including IRS and tax liens.
Third, by your figures, there is about $175K in payoffs/repairs for a $115K property. If the mortgage co. is legit, they'd have to discount pretty close to $0 to make this worthwhile to an investor (my opinion only of course).
Roger
Excellent reply Roger. I have never heard of a mortgage company that offers money to a customer in arrears. If there is no recorded mortgage or liens, then how can there be an arrearage? I would get it under contract pronto with her to rec. $600.00 at close. (I'm generous with your money) and then sort out the details.
[addsig]
So far the replys have given me some insight on what needs to go on, seems like the very first thing I need to do is get it under contract. Does anyone have an example they would e-mail me? I think it is very strange that they offered her some money too. A complete title search has been completed, first by the tax sale attorney, then second by the title company I'm using, and all the Deed of Trust's have been fully released by recorded "Full Release of Trust Deed", the last release states that ... for value recieved, hereby acknowledgees the satisifaction and discharce of the lien of said aforementioned Deed of Trust. there is no record of Citi Financial holding any type of mortgage on the property anywhere in public record, but I guess if they have one, they could file it at any time. I have not tld them there is not anything filed in the records.
Let me give a littel more info on this. Husband and wife owned the property, tax len was put on the property a year before their divorce, and they are already in the process of working out a payoff with me and my title company. She was awarded teh house in the divorce. After their divorce she moved and left the house abandoned, cause she couldn't afford to pay the mortgage she says. 5 years have gone by, and no foreclosure on the property. Property taxes have not been paid in this time either, prompting the tax sale. I was trying to get this property before going to auction. Especially since there didnt appear to be a mortgage on the property.
Now out of the clear blue and no contact with the owner in 5 years, Citi Finacial finds her and calls her up, she explains tht I am trying to help her out, and have sent her a quit deed, in exchange I would take care of the property taxes and the tax lien(that is on the ex-husband only). Thats where she says they offered some money. After I talked with them, they told me they had offered her $500 at closing. I dont know why. And he also told me I needed to submit a short sale package. I told him I was only willing to pay the 15000 in taxes and liens, because of the extensive amount of damage to the property. Now he wants a walk through BPO. I have the only key to the house. I am also going to get some estimates from contractors on the repair to submit in the package.
Heres where I'm at:
1. need to get the propert under contract, sales contract I assume. (need help on this, can someone send me an example?)
2. Need to get an authorization to release form (again, anyone have an example?)
3. Having the estimates done to submit with the pictures I have already taken to show the reduced valuation of the property.
4. Getting low sales comps in the area from real estate friend to submit.
5. Also getting the owner to sign a hardship letter.. (again any examples will be greatly appreciated)
6. Net sheet or closing statement.
After all this, will this complete a short sale package?
Thanks,
Tim
[ Edited by bgn2fsh on Date 06/15/2003 ]
Tim,
I mean no offense by this (everyone needs to learn right) but if you don't even have a purchase agreement ready for potential sellers to sign, you're probably not ready to start buying properties yet. I'd suggest that you contact a local investor and sign a birddog contract with them for a small fee and a lot of learning. This is not a business to muddle into, especially with a deal as screwy as this one.
Also, there is no proof yet that citifinancial even has a lien against the property, why would you be getting ready for a shortsale? This deal needs an attorney's review badly. Forget about the quit claim deed. If you want it, get it with a full warranty/grant deed and title insurance. If citifinancial's lien is not recorded, I believe that they would have a hard time collecting anything (again attorney review).
At any rate, you really need someone pretty experienced in RE investing for this one, either a good attorney or investor.
good luck
Roger
I talked to an attorney, he said the same thing, he thought they would have a hard time collecting anything. But now that they have contacted the owner, she doesn't know what is in her best intrest. Should I tell citi financial that there is not a recorded mortgage or lien? What should I do? Should I have her sign a disclosure and have a PO drawn up to start off with? She cant really sign a warranty deed if she knows there is a mortgage. Like I said earlier, the title company is ready to close and issue me title insurance as soon as I get some kind of paperwork from the owner.
HELP! WHAT SHOULD I DO? I really want this house. This whole experience been fun and educational so far with so much I still have to learn if I wanted to do this on a more permanent investor basis, but I just want this house for now, I just dont want it to come back and bite me where the sun don't shine.
Tim
bgn2fsh,
Glad to meet you.
BOTTOM LINE hire a real estate attorney to help you with this deal, you are way out of your leauge with this one.
Anyone trying to give you advice on this one without seeing all the paperwork would only be guessing. The liens can probably be negotiated down by a professional, I would think CITI does have some interest in this property or recourse against the title company who closed the deal.
Roger, pinned it down get an attorney.
Welcome on board this board, either you get professional advice or learn the hard way the decision is yours.
John $Cash$ Locke
I talked to a couple real estate attorneys friday, they had not even heard the term "Short Sale"... Do I need to just call around to different attorneys till I find one with experience with it?
Thanks for all the replys so far...
Tim[ Edited by bgn2fsh on Date 06/15/2003 ]
Take the very good advice from above and now let your fingers do the walking and call every RE atorney in the book and make certain they know there stuff!!!!!
PS - I think you are in my area go to my phone number I know some good attorneys in this area or at least can direct u to one.
As the others have stated this thing sounds screwey and I would not do a think unless u have a very good attorney review it.
SKI
About purchase agreements for Tim>
I do not recommend this approach but if both buyer and seller literally state I sell this property to Jo Blow and Jo blow states I buy this property from Miss Distress and both date and sign it>
It is a legal contract > I have done this twice much to the amazement of the Title companies and it sent their people in a tizzzy calling their attorneys having a fit > one of these was on a napkin!!!!!
But it worked. Try what works but do not let abunch of eggheads tell ya different how in the heck do you think people bougth propertys 150 yrs ago>yep 2 lines on a piece of paper!!
SKI
ahhh skidoddle...
I haven't had a laugh that good for a while. Thanks for your post. I'm still laughing imagining the title company's reaction to the napkin.
It was pretty funny and they had to call their attorney but I told the Escrow Officer (with 20 yrs experience0 it was a legal contract she did not believe it but Fedility Titles SF attorney set em strait!!
I knew it was before I went in there to open Escrow!!
SKI
Well things are definately happening with this deal, an I just want to do an update.
Found out today that citifinancial had hired a realty to "manage the property" the BPO is being done monday, then I figure they will list it for the BPO price.
I should have the sales contract, quit claim deed, a warranty deed, and letter of authorization in the mail on monday.
I am having the court house checked monday just to be sure there still hasn't been anything slipped in the books since the last title search.
I think the BPO will come in very very low, i hope anyway. I am going to make my initial offer of $5000 on monday also. If they don't agree, I may just throw up the red flag, record my deed and sue them for a "declatory judgement", which my attorney seems to think pretty strongly that I would win with no problem.
Well thats the latest and greatest. Will update more as the news comes in.
Tim
[ Edited by bgn2fsh on Date 06/21/2003 ]
The BPO came back much in my favor, due to all the damage to the property. I contacted the bank and got some of the loan information, ie loan #, initial amount, etc. Still waiting to hear back from the offer I submitted.
The mortgage company is ordering a spore count do determine the amoutn of mold in the property. Any one ever have experiece with this?
This is so much fun, as it should be.
Tim[ Edited by bgn2fsh on Date 06/26/2003 ]
I am to new to this business (like still reading books on it new) to give you any advice Tim, but I think it is so cool that you are actually doing deals. I'm only 17 and this is what I want to do after high school and it is reading posts like this that keep me excited. Good Luck!
The Ghini
OK, the DEED was finally filled today. After having a title attorney review my case, with a recent court ruling, with almost the same circumstance as mine, in my favor, he issued me title insurance, and told me to file the deed.
This is definately an unusual one, but i'm glad its finished.
Thanks to all that posted replys and opinions on this.
Tim