Help! MOTIVATED Seller Wants Out Of House!
So last week I decided to stop twiddling my thumbs and I placed about a dozen bandit signs in the area. Low and behold I got a call this morning from someone desperate to get rid of their house. WOW, it works! Seeing that this is my first time at this, I'm looking for a little advice from you veterans out there. Anyway, here's the situation:
Seller going through divorce
$15,000 in arrears
$208,000 mortgage balance
$235,000 ARV
$4000 repairs
$1320/mo payments
The seller is willing to deed property over if mortgage can be brought current. My problem is that the bank is going to put the property through foreclosure next Friday. I realize that this isn't one of those slam dunk, huge equity no-brainers that I'd obviously hope for in my first deal. Do I have options to delay the foreclosure process? I'm pretty confident that I could get lease-option payments of at least $1400/mo...IF I can find a buyer. Is this a deal???
Any advice from the pros out there? Maybe I have other options that I'm not considering. I don't think this is a short sale candidate...or is it?
Thanks for the help!!
Mike
Hi, Mike
This one might be a candidate for a sub2 purchase where you would bring the loan current to stop the foreclosure. You might check with John Locke on this since he is an expert in sub2 transactions.
My concern for you is that you would have to pony up the $15K plus $4K in repairs. This is essentially an 8% down purchase unless you can get your optionee to cover this (or some of this) as option consideration.
A short sale might be something to pursue except that you are really short on time to put one together. This might also depend on how well the bank is doing in your area at foreclosure sales. You need to speak with the bank loss mitigation department to see what they might do. I have persuaded a bank to postpone a foreclosure sale by putting up non-refundable cash (which was applied to the note payoff). I would not suggest that you do this with your transaction
Unless you can figure out a way to get someone else's money to cover the $19K, you may as well purchase another property with 80% or 90% institutional financing with a soft seller carry-back. Also, you are likely to be negative on the cash flow.
Someone else may have some good ideas, but personnaly, I would walk away from this one unless you can make headway on a short sale.
Regards,
Ed
There may be zero time to salvage the deal but do not forget that you have uncovered a tenant buyer. Become their landlord in another property and build a relationship until their credit can get back on track. Be a smart investor and strike while you have the opportunity.
Eric & Rosa
[addsig]
Mike,
Glad to meet you.
It is never in my nature to advise someone not to pursue a deal unless I feel strongly that it may not work out the way they feel it will.
So do not chase this one, go Short if time permits and you can get to the lender fast enough much better chance of coming out a winner. There is not enough spread with the upfront money you will put out.
You are in a great area, one of my Subject To students in your area pocketed $80K on her first deal and $50K on her second one both within a few months. These deals are the exception but then they were real deals. Both deals were with very little money, actually U-Haul money to purchase the properties.
Now I know you are excited I just don't want to see your first deal become your last deal. Take a lesson from the above numbers they are out there.
John $Cash$ Locke
PS: Good call Ed.[ Edited by JohnLocke on Date 06/24/2004 ]
by the time you figure bal., repair, arrears, and closing your close to to your arv. little to no eq. the only choice i see is buying for future appreciation and the rate of appre. depends on your area. be aware of the problems involved in l/o. the l/o'er can op. not to purchase and leave you holding the "bag" or in other words having to pay the full mort. amount. only buy if you can afford to carry the mort. if they walk. for me its still a "NO"- brainer. but if you are loking for future apprec. you can make it work.......kenmax