What is the best way to tie up a property?

Question

I am getting into short sales and was wondering what you all are using to tie up properties. From what I have read there are three popular methods...

-warranty deed -land trust -option contract

Thanks for your input!

Andrew B. · Answer

Thank you all for your input. I know there is much to learn in short sales and I have studied the other steps in the process. For me this is the last piece of the puzzle before I feel comfortable taking the plunge.

I will be sure to be more detailed and use better word choice in further posts. I know that short sales takes a lot of work and that I am focused on helping good people out of bad situations and not "tying" up a property.

I just want to be able to be able to focus solely on solving the homeowners problem and not worry about whether another investor is going to be able to swoop in.

Again, I appreciate all those who where encouraging and helpful.

Andrew B. · Answer

Thank you all for your input. I know there is much to learn in short sales and I have studied the other steps in the process. For me this is the last piece of the puzzle before I feel comfortable taking the plunge.

I will be sure to be more detailed and use better word choice in further posts. I know that short sales takes a lot of work and that I am focused on helping good people out of bad situations and not "tying" up a property.

I just want to be able to be able to focus solely on solving the homeowners problem and not worry about whether another investor is going to be able to swoop in.

Again, I appreciate all those who where encouraging and helpful.

Andrew B. · Answer

Thank you all for your input. I know there is much to learn in short sales and I have studied the other steps in the process. For me this is the last piece of the puzzle before I feel comfortable taking the plunge.

I will be sure to be more detailed and use better word choice in further posts. I know that short sales takes a lot of work and that I am focused on helping good people out of bad situations and not "tying" up a property.

I just want to be able to be able to focus solely on solving the homeowners problem and not worry about whether another investor is going to be able to swoop in.

Again, I appreciate all those who where encouraging and helpful.

Bob J. · Answer

I would definitely agree that short sales are a more advanced form of RE investing. I think the best thing to do is to learn how to do them from someone in your area who is currently doing them. It may take you several months to really figure out all the complexities, nuances and laws.

But... Considering that there were 3 million foreclosures last year and possibly 7 million this year, its well worth it to take the time to learn how to do them correctly.

A suggestion concerning your question though; a lot of lenders are getting wise to land trusts and option contracts. It seems better just to use a standard purchase and sale agreement. Then you MUST have a short sale addendum if you want to flip the property. The addendum will have the proper wording that will give constructive notice of your intent to re-sell at a profit. This will help the C buyer's underwriter understand your transaction.

You would want to record a notice of contract for the same reason. It will also protect your position.

I would also suggest that you don't want to think of yourself as 'tying up' properties. Real estate is really a business about helping people and if you're dealing with distressed homeowners you should want to be respectful of their situation.

I also agree that the fastest way to get some real cash in your pocket is by doing a few wholesale deals while you're learning shorts sales.

Good Luck!!!

Bill Gulley · Answer

Hi, if you have a good option, it will spell out that your have the option to buy the property in it's current condition, nothwistanding normal wear and tear, etc. and with good and merhantable title. Now if that's spelled out and any lien or encumbrances if filed after that date, it is the sellers obligation to clear that, some options I have seen made not mention of title conveyance or liens of record..However if it's for very much, it might not happen since the seller will only get about $1,500, so if he can't do it, you pay more or the bank allows it or walk away. You could also have recourse against the seller, but who knows what that is worth. This business has risks, finding out what the seller has done lately, like having work done on the property that has not been paid for should be covered up front. Good Luck, Bill

David Braut · Answer

Andy,
There is a lot to learn if you want to close short sales and not just "work on them". There are right ways to do them and ways that will just waste your time and end in frustration. This alone makes this niche worthwhile since many try and most just end up frustrated since they don't have the proper knowledge.
To answer your question, you may record a "notice of option" at the county recorders office if using an option contract or a "notice of purchase and sale agreement"/"memorandum of agreement" if using a p and s agreement. This will cloud the title and prevent someone else from "stealing" your deal.
For more info on how to be successful with short sales, contact me... Good luck!

Taylor C · Answer

Matt, you make a great point and it's a real eye opener.

Matt Mathews · Answer

I agree with Curt. Knowledge is Key. The paperwork involved with short sales alone, should be enough to make you choose another target market. In my opinion, Short Sales, unless your dealing with a local community Bank, one on one, are a big waste of time. Choose a niche' where the Herd of other Investors are not!! In spite of all the Short Sale and REO properties on the market, they represent less than 2% of all housing. Over 30% of all home owners today-don't even have a mortgage. 68% are paying their mortgages on time but may want to sell.

What is the best way to tie up a property?

What is the best way to tie up a property?

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