BiggerPockets

I've been working with a homeowner since July. It's a rental property in poor condition in a great neighborhood. He evicted his tenant for non payment and I marketed the house @ $99K. (Assessed @ 145K) No takers, needs lots of work. He owes $90 on the property. He tried to do a loan mod but doesn't earn enough. So we decided to do a short sale. I've put in 2 offers, (1st at $48K, 2nd @ $61K) both were rejected as too low and I was told that they would now "close my file". They want $75K for it. With the amount of work needed, I think an end buyer might go to $75-$80K so that puts me out of the picture with a double close scenario. I don't want to see this guy foreclose and I would like to get the property sold. Has anyone worked something out with an end buyer to get compensated for all of their work and delivering the deal but not actually participated in the closing? This would be an A-C transaction. I've read about many possibilities for adding fees on the HUD but my lawyer's not too keen on that. Any suggestions from those with more experience?

If I'm not mistaken you can add a negotiation fee on the buyers side of the HUD1 to where they have to pay you. I think thats what a lot of processors do, we've got a few on this board so hopefully they'll chime in.

Something to also consider, if you have to walk, don't get hung up on not being able to get paid on the deal. Don't let greed get in the way of helping the homeowner. Sometimes you have to walk and that's all there is to it. I'm pretty sure I'm walking on a deal and letting my listing agent list it directly for the seller here by the end of the next week b/c the lender just isn't budging and I can't get an offer at the listed price. I can't jeopardize letting the seller foreclose just because I can't profit

thank you all for advice given. I am right on board with both motiv8ed and Jonathan's comments...I want to do right by this man and anyone else that I deal with. Strange how many people ask me why I'm still bothering when there's nothing left in it for me....they don't "get" that there is [u]something in it...experience, satisfaction of helping someone out of a bad situation...Pls. don't consider this thread "dead"..I'd love to hear from others who have had a good result with a situation like this...

I agree with everyone on this post. I have a few deal where I have had to step aside and allow an A-C closing. I do it for the reasons stated above, but it also gives you added experience of negotiating a deal and will also help grow your business. A lot of previous clients will refer future clients to you. Almost all the properties I picked up in October were off referrals.

I should also add that I too have my clients sign a negotiations agreement with me as well. I flat out tell them upfront that if I cannot make a spread I will continue to negotiate their deal and help them find a buyer. It creates a win-win situation. Even if I cannot make a few bucks, they will still refer others to me like I stated above.

An item that has yet to be discussed is how getting the Seller a Buyer can help more than just collecting a fee. See, when you help a property owner in foreclosure and get the property sold, they will tell people about you. But when you explain that you will step aside to further assist, the referrals will come.

See, you have truly helped someone. And believe me, from experience, the word will get out. And this is the best marketing you will ever get.

Hello Y'all

This isnt a Short sale

Its a sub2 non equity deal seller financing using a wrap. 3 year call, add 18 % to the 99k add 1.25% to the underlying note... Sell this bad boy with 10k down plus arrears, sweat equity from the buyer for the repairs... And be done

I bet its a 28k turn and burn...

Happy house hunting...

Michael

Originally posted by Michael Quarles

Hello Y'all

This isnt a Short sale

Its a sub2 non equity deal seller financing using a wrap. 3 year call, add 18 % to the 99k add 1.25% to the underlying note... Sell this bad boy with 10k down plus arrears, sweat equity from the buyer for the repairs... And be done

I bet its a 28k turn and burn...

Happy house hunting...

Michael

Michael does have a valid point here and worth exploring. I am expected to close on a deal in a few weeks where it is very similar to what Michael described except I am taking a deferred interest in the deal and the buyer is coming up with all the capital to pay the arrears and taking it down with seller financing.

After failing to convince the 1st to take a short (which was a stretch since it is really not a short sale at all) and realizing it is in the 7th year of a 15 year mortgage, I changed gears and looked for a seller financing candidate.

After the arrears are paid and a little sweat equity, the property will have equity since much of the arrears will go towards principal.

After three years of living in the property, the buyer must sell or refinance ("3 year call"). If the buyer stays in the property for three full years, there will be an additional 24K in equity not including appreciation (or depreciation for that matter).

Although i will not get paid for several years, though I do not mind since I am out of Pocket ZERO, there will be a payday somewhere down the road.

It is also a good deal for the buyer since he will stand to collect the $8K tax credit for himself and have instant equity after some minor repairs.