"SUbject 2" or "Lease option" ????
Hello everyone, I need an advice on what my options are in this case. I have a prospective lead on the homeowner in N.Y. that is approximately 6 month into the foreclosure process. I have talked to the guy and he claims that house would be appraised around $600,000. According to him there is only 1 mortgage on the property and the total outstanding balance is $480,000 including all late payments and fees. Owner of the property says that he would like to keep the house but have no choice but to sell it or file bankruptcy. He also reacts very negatively to my suggestion of a Short Sale and an effort to save his credit. Guy thinks that everyone around trying to take advantage of his situation. What other options I might have on the table to offer him at this point? Would a “subject 2” or a “Lease option” work better?
Sorry for a lengthy post but any help would be really appreciated.
Thanks,
Dmitry.
Just because he claimed the house will be appraised at $600,000, doesn't mean it's worth that much. You should get comps of the area and make sure it is worth a good amount.
I assume you would not get qualified for $600,000. So, you can get it under contract and flip it to an investor or new buyer. Does it need repairs? You should get the seller to sign an ATR form so that you can find out exactly how much you have to pay the lender (mortgage balance, attorney fees, reinstatement fees, etc.) if you buy it. Then locate an investor or buyer who will buy it for more than you purchased it for. Do an assignment of contract or a double closing.
If you can get qualified or find financing for that amount, then I would buy it outright and then turn around and sell it. It's up to you.
Tanya
Thanks Tanya,
I have run relative comps and they came pretty close to what the owner states ($560,000 - $590,000). He claims that there are several offers on the property and he considers them. I don’t think it’s true for 2 reasons:
1. He has it on the market since January with no contract yet.
2. If there would be so much equity in the house he would be able to refinance it with cash out.
3. If he were so anxious to sell, then he probably would already do so by simply placing it slightly below the market price.
Something else is going on here. Either the guy in self-denial or there are more peaces to the puzzle that he is willing to reveal.
This seller sounds like he is not ready to sell to an investor yet. I understand that the foreclosure process in NY takes a year and if that is the case then he may still feel like he can play games at this point. He doesn't seem to have the necessary motivation right now. there is some equity there but he doesn't seem to want to use it to sell the house. If it has been on the market since Jan and not sold then whatever his asking price is is above market value.
If it were me i'd let him stew a while and contact him in a couple of months. Otherwise he is going to try to make things more difficult than you need and waste your precious TIME that you could be using to find a real motivated seller.
Great Luck,
KP
Thanks KP. That is exactly what I will do. The guy is too full of himself and thinks that world evolves around him. I don't see a lot of willing buyers around him and will check back from time to time just to see how is he doing