WHOLESAILING QUESTION FOR TEXAS INVESTORS

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WHOLESAILING QUESTION FOR TEXAS INVESTORS

Wally Martinez
Realtor · Sugar Land, TX · Member since 2016 · 11 posts · 2 votes

Hello BP Community,

Hope everyone is well and killing some deals this week. I apologize for my ignorance, but I have a question/ situation that I want pose to the community to see what some of the more seasoned investor’s thoughts are. Again, I apologize I’m still learning and have not completed my first deal yet.

(The stupidest question is the one that is not asked)

State: Texas

Situation: An Investor finds a seller that is facing foreclosure in 30 days and owes the bank $200K and the house has an ARV of $275K. The seller agrees to sell his house to the Investor for $75K cash. The Investor finds a buyer that will pay $100K immediately and all contracts are filled out and everyone gets paid. What happens next? Is it up to the seller to settle arrears with the bank and the Investor and buyer are free to move on to the next deal?

Can a seller sell a house for less than he/she owes on it and keep the money for themselves and settle with the bank later?

Please all comments and thoughts are welcome. Thank you in advance.

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Greg H.Pro Member
Moderator
Broker/Flipper · Austin, TX · Member since 2013 · 4k+ posts · 4k+ votes
7y

Ummm, that is a big NO.  The lender holds a lien on the property until the loan is paid in full.  Technically if the seller is within 30 days of foreclosure, the note has already been accelerated and is due in full

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  • Greg H.Pro Member
    Moderator
    Broker/Flipper · Austin, TX · Member since 2013 · 4k+ posts · 4k+ votes
    7y

    Ummm, that is a big NO.  The lender holds a lien on the property until the loan is paid in full.  Technically if the seller is within 30 days of foreclosure, the note has already been accelerated and is due in full

    3Reply
  • Wally Martinez
    OP
    Realtor · Sugar Land, TX · Member since 2016 · 11 posts · 2 votes
    7y
    Thank you Greg. Now I can stay out of trouble.
    0Reply
  • Mark Sewell
    Investor · Houston, TX · Member since 2017 · 1k+ posts · 871 votes
    7y
    The loan could be paid current and reinstated as part of a sale... I've never done one myself, but you can read up on subject-to existing financing. The due on sale clause would be triggered, of course, but that's another discussion.
    1Reply
  • Guy Gimenez
    Investor · Corpus Christi, TX · Member since 2012 · 2k+ posts · 1k+ votes
    7y

    @Wally Martinez

    On a side note, never put a seller nearing a foreclosure under contract with no intent or ability to close the deal. If you can't close or you can't make up the arrearages to keep them out of foreclosure, move on. Don't force a seller into foreclosure simply because you can't find an assignee. It's wrong. Your job is to provide a solution, not make the seller's situation worse. 

    1Reply
  • Mark Sewell
    Investor · Houston, TX · Member since 2017 · 1k+ posts · 871 votes
    7y
    Yes, you should have the cash needed to reinstate, plus reserves. Be fair to the seller, and be in a position to hold on to that house for a few months. I have some shrapnel sitting around in my SD IRA, earning nothing, and I keep telling myself I need to do something with it. This would be perfect. Let me know if you find something. There are 3-4 guys here on BP that I have met in real life that do these deals, and my advice would be to partner with somebody like them that has the team in place, and knows the process.
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