Avoid Telling Sellers What You Paid For Their Short Sale Property!
Ever want to avoid telling your sellers what you are paying for a property during a short sale?
I have an idea that I want your opinion of. I'm not sure if it will work everywhere, but it does in Iowa.
Heres what to do:
1. Negotiate the short sales
2. Take the property sub2. Pay transfer taxes (in Iowa fill out the Declaration of Value) for the full encumbered value on the property.
In Iowa it says to base the sales price on the "full amount of the actual sale price of the real property involved, paid or to be paid, including the amount of an encumbrance or lien on the property"
3. Next, you record your deed and extra state papers showing you bought a property for $200k. The seller OR buyer OR agent OR attorney may sign off on this. I, as a buyer, sign it.
4. Now either double close or payoff the mortgage holders at only $150k.
The world thinks you paid $200k to the property because thats what the law says to do.
This came about because I wanted to take a property sub2 for about 10 days rather than doing a double closing. When asking my attorney to fill out the Declaration of Value (state specific) he looked into the law and said that we must put the full amount down--not the newly negotiated price. I didn't think of it til later how nice this could be potentially.
Some people will say that if you can't disclose all parts of your transaction then it isn't ethical. Quite frankly my sellers don't care what I pay for the property--they don't care if I get a good deal or not--they just care if their problem is fixed.
My last house I made copies of the closing paperwork and the seller threw it in the trash on the way out of my attorney's office!
What do you guys and gals think??
How do you get the motivated sellers to speak with you? How do you find them. I have a foreclosure list. Is door to door better than a mailing campaign? :-?
Nee Chee, check out the marketing forum it will be more helpfull to you. i use bandit signs and will be mailing in the future. we are inindated with too many calls from our signs to even start mailings. hope this helps.
How can you get a short sale without a hardship letter (written and signed by the homeowner)? Don't the hardship letters typically contain the offer price?
Toronto, I view a HL as a single component in a comprehensive short sale application and accompanying proposal.
A hardship letter from the mortgagor to the mortgagee explains in detail the circumstances that have changed since the loan was originated and why those changes are both long term, and cause the home to be unaffordable, making the case that the only remaining option would be to sell the mortgaged premises. It is in the HL that the Seller states that he/she cannot sell without help/consideration from the mortgagee... specifically to permit the preforeclosure short sale of mortgaged premises as an alternative to foreclosure.
Details in support of the hardship are to be referenced (medical prognosis, termination of employment, death of spouse, unexpected expenses, etc.)
Market data can be alluded to, citing a reversal in market value... but this should be further detailed in the empirical market data section of the Proposal.
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Pro,
In your package to the 1st (lienholder), do you include an offer agreement that has the price you are offering the homeowner who has agreed (signed) to sell you the home (without them getting any of the money) that ultimatly is the price you are offering the 1st for the short, or do you use another method? Of course, the bank can say your offer is too low and negotiate from there, but generally, don't they like to see a starting offer given to the homeowner (since they do still own the home but the bank controls the money) where the homeowner has given the goahead with their signature for the sale on the agreement?
We are, after all, buying the home from the titleholder, not the bank, but are in effect saying to the bank "this is what I think the home is worth today, and I'll give 100% of the money to you and nothing to the homeowner."
Am I missing something here?
Thanks!
Great idear Stock, Smoke And Mirrors!
Toronto, you are correct in stating that the owner must ( at least to some degree) have a general understanding as to what the actual sales price may be.
I normally write an indept detailed report to the owner which basically gives them an estimated range of what I believe the property may be worth As Is, as well as a price range that I believe the bank may be willing to accept. Therefore virtually eliminating all ss pricing questions before they arise. The bank does not necessarily need to see to the sales contract in the initial stages of the ss
negociation. Depending on who the lender is you may be able to get a ss price with as little as a simple "offer to purchase letter."
Bottom line: The owners generally just want a solution to their problem as quickly as possible. If they can't keep it , why should they care what you get if for.
(Don't tell them this of course)
dl will
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How do you not tell the sellers what you are paying when they have to signa sales contract and attend a closing?