Potential Motivated Seller/Burnt-Out Landlord

Potential Motivated Seller/Burnt-Out Landlord

Leominster, MA · Member since 2013 · 38 posts · 5 votes

Hello BP Fam,

A few days ago I met face-to-face with a lady who contacted me after catching one of my bandit signs I placed throughout the area. In brief description, she is a burnt-out landlord who is behind on her mortgage and has no money coming in because her tenants are moving out soon and her brother (who lives with her) is no longer eligible to collect social security because they told them, "You are earning income from tenants", despite how their expenses far outweigh the income they received from the tenants. The sad truth is that both of them are noticeably physically disabled.

She mentioned a strong interest in going through with a short sale. Being a wholesaler, and not a licensed attorney or legal representative, what advice could I give her about the next steps she should take? Obviously this would have something to do with getting in touch with the bank, but is there something else she should know prior? 

Should this become a short sale, and the fact that I have potential buyers lined up, how can this become a win-win-win situation for her, myself and my investor buyers. Also, since we are dealing with banks in a short sale, and I heard that any "assignment" clause 9/10 times gets denied, would it be best to "acquire" the property with my investor buyer (buy and hold OR flip)? How would I set up an acquisition with my investor buyer when I have no money or credit to bring to the table (aside from marketing expenses)? Should I use another strategy altogether?

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Joel OwensBusiness Member
Moderator
Real Estate Broker · Canton, GA · Member since 2010 · 15k+ posts · 11k+ votes
11y

That one is going to be a mess to get across the finish line and take up a lot of your time. You might want to just collect upfront a finders fee from an investor and let them roll the dice on the lead.

Maybe get 500 to 800 for your time.

No legal advice given. 

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  • Residential Real Estate Agent · Atlanta, GA · Member since 2009 · 381 posts · 134 votes
    11y

    Do the short sale and double close, pull transactional funds to close the A to B side. Find someone here of BP to loan you the money.

  • Joel OwensBusiness Member
    Moderator
    Real Estate Broker · Canton, GA · Member since 2010 · 15k+ posts · 11k+ votes
    11y

    That one is going to be a mess to get across the finish line and take up a lot of your time. You might want to just collect upfront a finders fee from an investor and let them roll the dice on the lead.

    Maybe get 500 to 800 for your time.

    No legal advice given. 

  • Rental Property Investor · East Wenatchee, WA · Member since 2014 · 10k+ posts · 16k+ votes
    11y

    @Patrick Sullivan short sales are for properties that are underwater.  Does she owe more than it's worth?  If not, could you catch her up in exchange for the deed  (provided there is at least 3-5x equity vs arrears)?  

    How much in arrears?  How much is the principle balance owed?  What is the property worth in as-is condition?  With these answers, we can better help.  Thanks!

  • Joel OwensBusiness Member
    Moderator
    Real Estate Broker · Canton, GA · Member since 2010 · 15k+ posts · 11k+ votes
    11y

    With experience comes knowledge of TIME. You can possibly make XX return but how LONG will it take to achieve that??

    About a decade ago I would work on small commercial deals. One time I spent 4 months negotiating a 30 unit vacant building. The structure was good but inside was a complete redo at 13k a door. There was also a large water lien, the short sale, and also getting a deficiency waived.

    4 months later and a 3k per door purchase price it wasn't worth my time. Tons of hours in as a broker to make 2,700 commission or 5,400 double ending it.

    What I learned from that experience is to choose what you work on. Today I would rather wait on a client wanting to buy a 3, 5, 10 million property, buy my own deals directly, or syndicate a larger deal as the sponsor than work a small deal property with tons of issues and headaches.

    If this is the only lead you have then some will say keep working it but you do not want to get so involved with this deal that you put everything on it and the other deals slip through the cracks.   

  • Leominster, MA · Member since 2013 · 38 posts · 5 votes
    11y

    @Steve Vaughan

    She does owe more than the property is worth ... it is a two family, in a somewhat tough neighborhood, and the total outstanding principal is 124K

  • Investor · Glendale, AZ · Member since 2015 · 113 posts · 47 votes
    11y

    Hi Patrick,

    I have processed over 300 short sales from begging through approval over the past five years. That being said, no short sale is the same. It depends on the lender, the investor, the seller, the negotiator, the negotiator on the bank side, etc. For example, Bank of America may be the lender, but the final decision comes down to the investor, which Bank of America has thousands of investors who own the loans. My questions for you would be, how much upside down is the house? how much are they behind on payments/late fees? How much time is left on the loan? Depending on the answers to those questions you may be able to have an investor take over her mortgage “Subject to” and then pay you an assignment fee. For example, if the house is worth 110k and the owner owes 100k, but is late 20k on payments and the loan has only 25 years left or something like that I think an investor would be wise to pay the 20k past due payments, pay you assignment fee, and then they lock down a 110k property for only 20k (no loan hassle or anything). However, if it is a property that is worth 110k and the seller owes 200k then I don’t think it will be worth it and a short sale might be the best option. If I were in your situation I would refer the lead to a real estate agent or attorney that specializes in short sales and tell them you have a buyer for it (you should double check to make sure this is legal in your state/city/etc) or ask for a lead in exchange if you are not a realtor and can’t get referral fee etc.

    -John

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