Seller wants to sell BADLY! What do I do?

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Seller wants to sell BADLY! What do I do?

Gabriel A.
Gainesville, VA · Member since 2018 · 48 posts · 9 votes

I'm a rookie investor and started cold calling yesterday. Found a property thats going for tax lein sale in Baltimore in the next few weeks. The lien is about $400.

I called the lady and she said she's been trying to get rid of the house since 2015. She found out it was sold to her with an unclean title, she hasn't mad any payments on it since 2015. Said she attempted to do a "deed in liue" but was denied. She said the mortgage company is going through chapter 11 bankruptcy and someone put in a short sale offer a month ago (not sure how that works) but she hasn't heard anything back. She said she has no clue whats going on with the bank.

She badly wants to sell, says the property has never been profitable for her. She said she overpaid for the property and bought it for 173k in 2008. The ARV is about 140k right now. I posted this in this forum because I'm not sure if this property is in the pre-forclosure stage or how I find out what going on with it.

I'm a new investor and I have no clue what to do. Any help and advice is welcome. 

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Tom GimerBusiness Member
DMV · Member since 2017 · 3k+ posts · 3k+ votes
7y

For someone new to REI, a potential short sale on a property with title issues is not a good starting point.

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  • Theresa HarrisPro Member
    Member since 2019 · 15k+ posts · 11k+ votes
    7y

    Why not start by calling her bank and finding out.?

    0Reply
  • Gabriel A.
    OP
    Gainesville, VA · Member since 2018 · 48 posts · 9 votes
    7y

    Ok I can do that I have the company she has the loan through. I'll call and ask for the total amount she owes and the current status of the loan. 

    Is there anything else I should ask them?

    0Reply
  • Mark Pedroza
    Real Estate Agent · Sacramento/Placer ~ San Francisco Bay Area counties · Member since 2012 · 1k+ posts · 743 votes
    7y
    Originally posted by @Gabriel A.:

    Ok I can do that I have the company she has the loan through. I'll call and ask for the total amount she owes and the current status of the loan. 

    Is there anything else I should ask them?

    The bank won't talk to you because your not on the loan. 

    You'll have to get in touch with the motivated seller (again) and have her call to find out the total amount of back payments that are due and then the payoff amount...

    5Reply
  • Gabriel A.
    OP
    Gainesville, VA · Member since 2018 · 48 posts · 9 votes
    7y

    Ok thanks @Mark Pedroza.

    When she mentioned someone put in a short sale offer a month ago but she hasn't heard anything back I'm not sure I understand that.

    And what exactly am I supposed to do about the title on the property that's not "clean" ?

    2Reply
  • Tom GimerBusiness Member
    DMV · Member since 2017 · 3k+ posts · 3k+ votes
    7y

    For someone new to REI, a potential short sale on a property with title issues is not a good starting point.

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    6Reply
  • Gabriel A.
    OP
    Gainesville, VA · Member since 2018 · 48 posts · 9 votes
    7y

    @Tom Gimer yea when I was searching for properties on the MLS I was shying away from short sales. I came across this property from cold calling.

    Part of me wanted to just do a little due diligence to see exactly what I uncovered. The seller said she's been trying to get rid of the property for 3/4 years and sounded like she literally would sell it for nothing if she was able to.

    0Reply
  • Gabriel A.
    OP
    Gainesville, VA · Member since 2018 · 48 posts · 9 votes
    7y

    @Tom Gimer should I just reach out to a title company and have them run the title to see what all is owed? 

    0Reply
  • David Braut
    Rental Property Investor · Grass Valley, CA · Member since 2010 · 69 posts · 21 votes
    7y

    A short sale is when a homeowner is in pre-foreclosure but agrees to sell the house to a buyer who then presents the offer to the bank.  The amount owed on the loan/house is more than the amount of the offer.  The bank will often accept a "short payoff" as "payment in full" for a loan that is in arrears to avoid the foreclosure process.  This process can take a long time.  Usually months.  Many buyers are unwilling to wait that long and so the pool of buyers is not as large for short sales as for traditional home sales.  This can offer potential deals for investors willing to wait and jump through the banks hoops.  I once made over $40,000 assigning a short-sale contract to a cash buyer that I negotiated with the bank myself.  On another deal a 2nd lender accepted about $4500 as payment in full for a defaulted note of $64,000.  Keep learning.  Keep trying and the fact that you are cold calling, taking action, and asking questions here means that you are already ahead of the curve!

    4Reply
  • Gabriel A.
    OP
    Gainesville, VA · Member since 2018 · 48 posts · 9 votes
    7y

    Oh wow 40k assignment fee thats awesome. 

    Thanks for the insight and the positive feedback @David Braut i’ll keep digging and see what comes of it And in the mean time I’ll get right back to calling my list. 

    0Reply
  • Tom GimerBusiness Member
    DMV · Member since 2017 · 3k+ posts · 3k+ votes
    7y
    Originally posted by @Gabriel A.:

    @Tom Gimer should I just reach out to a title company and have them run the title to see what all is owed? 

    In Maryland everything you need to know about a property can be found online... from SDAT property and ownership info to mdlandrec.net for land records to MD Judiciary case search for court records to county property tax records, etc. If I was new to REI I would teach myself how to conduct a title search without having to pay for it.

    Besides, title companies don't want title search orders, they want closings.

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    4Reply
  • Ron S.
    Paradise, CA · Member since 2015 · 1k+ posts · 871 votes
    7y
    Originally posted by @Theresa Harris:

    Why not start by calling her bank and finding out.?


    Call the bank? For what? I'm half thinking you were joking when you suggested that.
    0Reply
  • Lydia R.
    Investor · Austin TX · Member since 2016 · 1k+ posts · 2k+ votes
    7y

    @Gabriel Addy First lesson as a newbie, evaluate a deal to see if its a deal before spending (wasting) a bunch of time on it. If the owner is upside down, the payoff (including 4 years worth of late fees and escrowed taxes) is more than what the property is worth then what is your exit strategy?

    0Reply
  • Kelly DeWinter
    Member since 2018 · 259 posts · 159 votes
    7y

    STOP !

    "She found out it was sold to her with an unclean title"

    Talk to a title company to find out the issue with the title, If owner purchased title insurance, it may solve title issue for owner.

    A buyer will be unable to close on the property if the title is not clear.

    Contact a title company or the Owners title company first  before wasting time and effort.

    0Reply
  • Gabriel A.
    OP
    Gainesville, VA · Member since 2018 · 48 posts · 9 votes
    7y

    So I found out 140k is owed on the mortgage, and she owes 40k. She said only ever receives the bill for the 40k and its assigned to a debt collector.

    So as I mentioned she tried 3 years ago to do a deed in lieu, which was rejected, and about 2 months ago another interested buyer submitted a short sale offer directly to the lender and the seller hasn’t heard anything since. 

    Why would the lender, who isn’t receiving payments let a property sit for 3 years and counting, deny the deed in lieu and not respond to short sale offers? What the hell are they waiting on? Why don’t they start the foreclosure process? And isn’t foreclosure more expensive for them than accepting a short sale?

    0Reply
  • Landis Whitehurst
    Landlord · Baltimore, MD · Member since 2015 · 15 posts · 8 votes
    7y

    I'd say the first thing you need to do is control the property with a contract and make sure it has an escape clause in it.  That way you have time to properly analyze everything and either renegotiate or back out of the deal, as necessary. 

    And just to make sure you're aware, a ton of Baltimore City online services are at a standstill due to a ransomware attack, so pretty much any and all real estate transactions are at a standstill until it's dealt with.

    I'm also curious: if you're from Virginia, why are you farming in Baltimore?  Why wouldn't you look closer to home so you can get familiar with an area more easily accessible to you?

    0Reply
  • Gabriel A.
    OP
    Gainesville, VA · Member since 2018 · 48 posts · 9 votes
    7y

    Thanks for that info @Landis Whitehurst.

    I live in NOVA so its not too far, about an hour nd change drive. I'm looking in bmore because I'm not looking to spend half a million on a property. My target price is homes between 60-90k with ARV being around 160-190k.

    0Reply
  • Landis Whitehurst
    Landlord · Baltimore, MD · Member since 2015 · 15 posts · 8 votes
    7y

    @Gabriel A.  OK.  Just make sure you know your area.  A lot of people outside of Baltimore come here to invest, because it's "cheap"; and still overpay.  A good deal to an out of towner isn't necessarily considered a good deal by investors from Baltimore.  I picked up a property recently that the investor had overpaid so badly for, that she actually came to the closing table with a check for $46,000.

    1Reply
  • Ned CareyPro Member
    Moderator
    Investor · Baltimore, MD · Member since 2008 · 17k+ posts · 13k+ votes
    7y

    @Gabriel A. I wouldn't even consider pursuing this deal, too  much work for potentially to little if any reward. To @Tom Gimer's point Short sales are HARD and take a LONG time.

    But to Tom's second point maybe you should pursue this simply as a learning process. I have plenty of deals to work on. My guess is you do not. You might want to spend your time on this one. 

    To talk to the bank you need a release from the owner giving them permission to talk to you. I would also find out what the bid was for at the tax sale. It was on Monday. 

    She said "It had not been a good investment for her" I presume it is not owner occupied. If she does live there; DO NO PROCEED, Maryland laws to protect homeowners in foreclosure are very tough and could give you heavy fines and even jail time.

    1Reply
  • Lynnette E.
    Rental Property Investor · TN · Member since 2018 · 2k+ posts · 2k+ votes
    7y
    Originally posted by @Gabriel A.:

    So I found out 140k is owed on the mortgage, and she owes 40k. She said only ever receives the bill for the 40k and its assigned to a debt collector.

    So as I mentioned she tried 3 years ago to do a deed in lieu, which was rejected, and about 2 months ago another interested buyer submitted a short sale offer directly to the lender and the seller hasn’t heard anything since. 

    Why would the lender, who isn’t receiving payments let a property sit for 3 years and counting, deny the deed in lieu and not respond to short sale offers? What the hell are they waiting on? Why don’t they start the foreclosure process? And isn’t foreclosure more expensive for them than accepting a short sale?

     Maybe they do not want to foreclose because there is a title problem and they could not resell it with the title problem.  Same reason they do not want deed in lieu of and that they do not want to do a short sale--they can not deliver a clean title.  And maybe they are waiting because some title issues can be worked out with time, like redemption rights.

    0Reply
  • Minna Reid
    Real Estate Broker · Jacksonville FL & Middletown, CT · Member since 2008 · 1k+ posts · 633 votes
    7y

    Title issues are what would have prevented the deed in lieu. I would still pursue this. The first thing you want is a full tally on all the debts. Run title to see what they are. Have the seller give you a third party authorization so you can speak with the lender. I assume its Ditech? They are the only ones I am aware of going through bankruptcy right now. You can then proceed with a short sale. The property will have to be listed for at least some period of time, so you will need an agent to help you. Find one with short sale experience. I love short sales with Ditech - usually a breeze. Assuming the title issues are not crazy, and this is actually Ditech - I see no reason why you shouldn't proceed. Just get some help with the short sale as you don't have the experience to go it alone, IMO.

    1Reply
  • Isaac El
    Springfield Gardens, NY · Member since 2017 · 258 posts · 63 votes
    7y

    @Landis Whitehurst  How does an escape clause in contract work?

    0Reply
  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    7y
    Originally posted by @Tom Gimer:
    Originally posted by @Gabriel A.:

    @Tom Gimer should I just reach out to a title company and have them run the title to see what all is owed? 

    In Maryland everything you need to know about a property can be found online... from SDAT property and ownership info to mdlandrec.net for land records to MD Judiciary case search for court records to county property tax records, etc. If I was new to REI I would teach myself how to conduct a title search without having to pay for it.

    Besides, title companies don't want title search orders, they want closings.

    Great advice Tom.. my Daddys attorney in circa about 1969 before I was old enough to get a RE license but was around real estate all the time ( my dad drug me to his meetings with him and many were with his attorney)  he said son you want to make it and get ahead of the pack you Learn the court house.. now in this context this means going in and going through the old books and recorded plats etc. 

    in todays age it simply means understanding all the on line tools and what it all means.. this is where the money is made. 

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  • Landis Whitehurst
    Landlord · Baltimore, MD · Member since 2015 · 15 posts · 8 votes
    7y
    Originally posted by @Isaac El:

    @Landis Whitehurst  How does an escape clause in contract work?

    It's simply a clause or phrase In the contract that allows you to back out if certain conditions aren't met.  There are an infinite number that you can use, but a financing contingency and/or an inspection are the two that most people are familiar with. 

    0Reply
  • Isaac El
    Springfield Gardens, NY · Member since 2017 · 258 posts · 63 votes
    7y

    @Landis Whitehurst got it, thank you!  On inspection what kind of things in general do some people put in?

    0Reply
  • Landis Whitehurst
    Landlord · Baltimore, MD · Member since 2015 · 15 posts · 8 votes
    7y

    @Isaac El, you can put in pretty much whatever you want, as long as the seller agrees to it.  But a general phrase I use is "contingent upon Inspection acceptable to buyer at buyer's sole and absolute discretion."  That allows you to use anything you want to call the inspection unacceptable. 

    0Reply
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