Money To Seller
Met with seller today. Very strange situation. He basically has a house that he has been in for 11 years. He started remodeling a while ago, and then lost his job. He does not care about his credit, does not want to list it, and just wants to ride out the foreclosure. He said if he sold it he would want $5000 to move. There are lots of things to finish on this (repairs). ARV should be around $90,000 with about $10,000 in repairs. Current fair market value is $80,000 but I don’t think the city knows its condition. The seller has not made a payment in 5 months. He has not paid taxes in 5 years. He said his lender would no longer accept his calls or talk to him. I think they are tired of dealing with this. They sent him a payoff letter last week. The loan balance is $34k. There are attorney fees of $1800. They also have been paying the taxes so there is an escrow overdraft of about $13,500. Total payoff of 50k
I first thought sub2 because his loan balance is fairly low. I then found out about all the back taxes and other stuff and realized this may be very hard to take over payments without bringing in a ton of money, which I don’t have. Then I thought about a short sale as I was driving home. I can take pictures of hanging live wires, ripped out ceiling, etc…. My only problem is how do I get money to the seller then without committing fraud? I know I should not offer him his 5k but unlike most people he could care less about his credit. The only way I could make this work would be to pay him.
Sorry this was so long but there is so much involved with this.
"Current fair market value is $80,000 but I don’t think the city knows its condition."
If you are speaking to a tax assessed value of $80,000... that might not coincide with it's appraised value.
You must ascertain the property's as-is, fair market value to determine if a short sale is warranted.
If it is worth $80,000 and has a payoff of $50,000... a short sale isn't indicated.
If a short is indicated, and approved, it is conditioned upon the Seller getting zero proceeds.
You can either pay the Seller for services, or applicances, or something via a separate agreement.... or, slip him cash, or, make a dedicated, tax deductible contribution to a charity who, in turn, makes a gift to the former homeowner upon handing you the keys.
You may be able to do a deal with this guy , but not before he giving you ulcers., I would do two things before going forward. One, get a purchase agreement in writing. Two, get a preliminary title report. If I was a gambling man , I'd bet that his guy has a ton of liens and judgement which have attached to the property. If that's the case there's no need to pursue this any further.