Tax, Mortgage, and other liens

[Ronnie Galindo]

Hello BP, 

Question, has anyone bought a property that had liens that amounted to more than that of the property value? How hard was it to get through that and how much time did it take? 

We found a perfect live in house-hack/flip but the owner has around 1.2mm in liens and the house is only listed (and worth) 850k. The seller is working with a tax attorney to get letters to lenders/IRS/etc. to do a short sale but wondering if anyone had personal experience?

Thank you,

-Ronnie

[Andrew Garcia]

Hi @Ronnie Galindo, I am assuming this is going to be a conventional buyer.

Working under that assumption, the biggest thing to get is the short sale approval letter. Ultimately, it does not matter if the liens are greater than the purchase price if the difference is forgiven by the loan servicer. 

Below is the guideline for purchasing short sales for conventional.

When processing a short sale transaction, the following documents are required:

1. A Purchase Agreement/Escrow Instruction signed by the buyer and seller that includes the final details of the transaction. This includes all additional fees or payments being made by the buyer in addition to any necessary funds needed to complete the transaction.

2. A written approval to participate in the short sale from the servicer with written details of the additional fees and payments and has the option of renegotiating the payoff amount to release its lien.

Hope this helps!