BiggerPockets

After many starts and stops trying to get started in some area of real estate investing, I finally have calls starting to come in from a direct mail campaign. Problems is that I have many serious questions, and while I don't mind telling someone that I don't know, that I can find out and get back to them, I think you can only say that you don't know so many times in a single conversation before you appear to know very little.

So without making this too long, perhaps someone with more experience can lend some advice or answers.

Two biggest questions I have:

#1. What happens if I get through the entire short sale process, the bank approves the price, the seller is on board, and I just don't find a buyer? There's no question that it would be from a lack of marketing effort, as I'm sure I'm going to go far out of my way to get my first deal done so I can move on. Surely this must happen though. If a buyer doesn't materialize, then what? What happens to the seller? How do I protect them?

#2. What happens if the bank doesn't accept proof of funds from a transactional lender? I've heard it happens from time to time, and I do not have a backup plan here.

I am most afraid of convincing a distressed seller that I've come along to help them only to have the entire deal fall apart and them suffer further consequences. Any helps or ideas are most appreciated.

Oh, and what if you don't find a buyer?

That is life. You do your best but if you don't find a buyer then you can bet that your short sale deal wasn't that great to begin with so you move on or try to ask for a lower price.
There isn't much you can do to protect the seller. When they sign with you, they are making a bet that you will get the job done. They won't always win that bet, but if you do win a SS approval from their lender at least they know what the bank will accept and the groundwork is laid for the next person to try.

Good Luck.

Hi, Steve has a very good point!

What if, this isn't the right strategy for you in real estate?

What if, there were other ways for you to "invest" without being so responsible for messing up someone's life and financial condition?

What if you could find a buyer before you entered into a SS contract?

What if you first used an open option with the seller, just between you and the seller, then you found your buyer, then convert that to a SS contract and then do your deal?

Good luck, Bill

Guess you mistook the comments as the "what ifs" I didn't mean to say you would, but that's what you seemed concerned about and that's very good!

Doing it like you are, you are assuming risks of doing just that. If a seller get hung up in a contract and yours is accepted, you go to close and you can't perform because you don't have a buyer, what do you do? If the seller loses that deal, what will the lender do, it was on the market, went to SS, failed, then what's next, foreclosure? Maybe the messing around will effect the seller and have consequences.

I suggested you work them as options until you had things in place to do your deal, with a buyer lined up. You really can't look for a buyer until you have a contract and you don't have one unless the lender agrees, that's a small window to work within. Good luck with your prospective deals....Bill

I would have no problem removing myself from a transaction if it meant getting the deal done. I figure I gain experience and knowledge even if I have to wait for the money.

Many thanks James.

Very good! There are two things that will apply in all strategies in real estate.

1. There will be a problem; and

2. You don't have a deal until it is closed!

Jeff, You have some good advice here and you seem to be conscientious. Reality is at times you will not find a buyer with enough spread and you need to step out of the way and let it go A to C, like James said. If no buyer can be found even without profit the seller is in no worse condition then they would have been without your involvement.

You want to be very thorough in your disclosures to the seller (ie you are an investor looking to make a profit, you cannot guaranty success, etc.). Especially because these are distressed asset/distressed homeowner situations you want very thorough disclosure and the outcome for the homeowner does need to be a primary consideration - which it sounds like you already get. Some POF's out there will get questioned. I have not have any problems with mine.

This sounds like me when I first started, thinking about all the "what ifs" that could happen and talking myself out of doing anything at all. Then I decided to just deal with them as the come up. Most of the time they don't come up but when they do it's easier to deal with a real problem then a "what if" problem.