Quitclaim Deed, Subject To & Putting a Wholesale Deal on the MLS

9 Replies

Working to close my first deal. It's a nice property that can be sold to a retail buyer. Owner is 3 months past due, on the verge of foreclosure (lending company is holding off foreclosure because of our agreement to buy the property). I have spend a month trying to get this property on the MLS to market to retail buyers. None of the local flat fee realtors/brokers will do the agreement with me because we are not the owners on the deed. They state that because we only have equitable interest, we cannot sign the listing agreement. They state their local board rules. Whether they are just not understanding the exact meaning of the rules, or whether we really can't be the ones that sign, I am not sure. But at this point I am running out of valuable time to mess with trying to find someone and then wait for a retail buyer to be interested and buy. SO, I was thinking of paying the back payments and curing the default and doing a quitclaim deed so I become the owner and can this house on the MLS. I am working closely with a title company, and the title is clear from what I can tell.

My question is really about how to PRESENT this to the owner.  Her back payments get paid and she is no longer delinquent, however I am thinking she would be wanting right away the payout she would get after the payoff of the mortgage.  How do I sell this idea to her?

Just as you said above, but with the benefits to her:  the fastest I can work is like this.  You can move on immediately, start improving your credit and get on with your life.  

When you make up the back payments, you are curing the default, so explain to her what that means, and how that is a benefit to her.  

Call a traveling notary. Each of you sign a purchase agreement, a quitclaim deed on hand, notarize that and a POA so that you can deal with the lender directly. Ensure there is no second mortgage involved, or tax lien.

I don't think that you can "wholesale" on the MLS. You are kind of flirting with disaster for "brokering without a license". Not to mention going to the people who are likely to complain asking them to list it. Ever wholesale deal I have done has been off market. If you want to sell to a retail buyer you may have to buy the home and resell it. (people call that wholetaling around here sometimes)

Ryan Dossey, Real Estate Agent in IN (#RB15001099)

I am thinking you know what to do from there...but maybe not.  Check to make sure there are no other encumbrances.  Go to a title company and record that deed.  Once the deed is recorded, the property is yours while the mortgage is still hers.  Sort out your insurance, so if something happens while you own the property you are covered.  Sell your property and pay off her loan.  Ask your title company to hold open the title.

I do have a purchase contract, as well as an authorization release for her lender.

I guess I am just worried about her perception of signing the deed, without getting her payout yet.

Can the deed be recorded and held open?  What is the reasoning for holding it open?

Thanks!

@Suzette Bickers  , first you said "None of the local flat fee realtors/brokers will do the agreement with me because we are not the owners on the deed". But it looks to be that your other equally valid concern is "I guess I am just worried about her perception of signing the deed, without getting her payout yet". I agree with @Ryan Dossey  , good luck...

@Suzette Bickers

Never waste time when a property is on the verge of foreclosure.  If something isn't working, change course ASAP. 

We have the same rules for our MLS although they're often violated without consequence. However, if you're selling retail, I'm trying to understand why you wouldn't have already taken the property sub-to and recorded the lien.

If it's an issue of the seller being afraid of not getting whatever equity you promised, she could consider taking a second lien for that amount so she will get it when the end buyer closes. 

There are other options available too, but since the seller is nearing foreclosure, you should be able to "sell" her this concept quite easily, especially if she understands she gets nothing if the bank forecloses.  

Separate question,

Would the next buyer have a problem with their mortgage lender if they are buying the property from us, having bought the deed with only a quitclaim deed?  They will be doing a title search anyway, correct?  This should be okay?

@Suzette Bickers  

I don't know your state laws, but in my state Quitclaims are not recognized by title companies so I will not allow conveyance to my company with less than a special warranty deed. Even if you did the same, you can't sell FHA due to seasoning requirements, so conventional, cash, etc. are you options.

But, if you're buying sub-to, you can simply sell to another investor or retail buyer who needs financing in place. Just do it right per Dodd-Frank.

I'll PM you with another strategy I've used too.  

@Suzette Bickers in my area the MLS does allow a property to be listed if you have it under contract. However if it is listed already there cannot be two listings at once.

I guess I am just worried about her perception of signing the deed, without getting her payout yet.

Don't worry about something that hasn't happened yet. There is no harm in asking. Just be prepared with a response if she doesn't like the idea.

You can get a quit claim deed, to be followed by a confirmatory warranty (or special warranty) deed. I doubt the lender will care as long as there is title insurance. i would clear it with the title company in advance.

Not legal advice, but simply how I might handle a similar situation.

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