Need help! Homeowner probably needs a short sale/deed in lieu

11 Replies

Homeowner with equity in home, who wants to sell property, asked me for a deed in lieu, but I am a wholesaler and I don't know how to talking to a lender to negotiate on his/my behalf.

Home is comped at $130k to $140k. Owes $66k. Needs at least $15k in work but is asking for $130k. It is in/near a good, historic area of city.

A) how should I navigate this so I can profit as a new investor with no experience in this type of transaction &

B) simultaneously get this homeowner out if this situation?

A deed in lieu of foreclosure is a deed from the homeowner as grantor to the lender as grantee, so there is not likely to be a payday there for you. For the lender to consider DIL there normally can be no other liens or mortgages that are to get paid.

Since they owe less than what it is worth, the lender is unlikely to consider a short sale. So that leaves you to get it under contract and wholesale if you want to get paid.

Why would the homeowner even contact me if he has so much equity in home and is asking for full price? Why not just go through real estate agent?

I'm meeting him midday today. Are there specific questions you would ask him? And for wholesaling to work, I can't offer him 80% ARV, right?

Thanks,

Matt

Please learn something before you go start messing with people's futures and properties. I know some people say just jump in, you learn by doing. But apparently you have no idea what a short sale or a DIL are. These are only possible when the owner owes More than the property is worth, and the Lender agrees to take Less than what is owed. Please don't get involved with anyone in foreclosure.

Originally posted by @Wayne Brooks :
Please learn something before you go start messing with people's futures and properties. I know some people say just jump in, you learn by doing. But apparently you have no idea what a short sale or a DIL are. These are only possible when the owner owes More than the property is worth, and the Lender agrees to take Less than what is owed. Please don't get involved with anyone in foreclosure.

I know exactly what a short sale is. I'm trying to figure out this homeowner's motivation for even dealing with me which is why I am here.

Please show me where I said this homeowner is in foreclosure.

I'd brush up on my grammar before typing, if you want to talk about not doing things one isn't familiar with, with reading and writing being your deficiency. Maybe that condescending tone is a coping mechanism for bad grammar and poor reading comprehension.

If has an ARV of $130K but needs $15K in work, there's no way the seller will get $130K for it. Or, do you mean its worth $130K as is.

Do you have buyers who would be interested in this property? If so, how much would they pay? As a fix and flip you might be able to pay $70-80K to the seller, take a $5000 fee for yourself and sell it to a rehabber. But if the seller is asking $130K you're a long ways apart. I suspect the seller knows they won't get $130K, but it looking for something a lot closer to that than $70K.

OTOH, if the seller is the one who bought up a deed in lieu then perhaps he really would be willing to just walk away. Seems very dumb given the large amount of equity, but who knows. But it makes no sense for you to have a conversation with him about a deed in lieu. Nor is there a need for a short sale.

If you do have buyers lined up, and the seller is willing to take a beating on the property (i.e., give up a bunch of his equity) then you might put together a very straightforward wholesale deal.

Jon Holdman, Flying Phoenix LLC

It sounds like there might be something missing or the homeowner does not understand that you are looking to buy at a discount. If they owe $66k then there is no need for SS or DIL unless the house is worth less than $66k. Do they have a second mortgage? Sounds like they want retail for it and if that's the case I just refer these people to a realtor. When you meet with him just make sure you get all of your numbers correct and make an offer that makes money.

To John Holdman:

The seller asked for a "lieu in lieu," which told me that he isn't completely uninformed on the real estate investing options.

I'm going to try to get him under contract for a generous $80-85k offer which is unfortunate for him because he has a good amount of equity and the repair work, from peeking in, is work I can do and I'm no handyman.

I haven't gotten the man under contract but I plan on doing it today at lunch. He canceled in me yesterday because he had an emergency meeting with the banker.


The home can sell for $130k when listed.

Originally posted by @Wayne Brooks :
... But apparently you have no idea what a short sale or a DIL are. These are only possible when the owner owes More than the property is worth, and the Lender agrees to take Less than what is owed. ...

Wayne, a DIL is possible regardless of whether the borrower owes more than what the property is worth. But for the lender to consider DIL, other liens and mortgages remain in place, and the lender will usually not want that.

@Steve Babiak Yes, a DIL is possible with equity, I misspoke, but wouldn't expect someone with equity to do one, and generally the bank would request the owner with equity to simply sell it, as opposed to taking a DIL.

@Matt Thompson I'm not sure where my grammar is off, but I'm satisfied with my reading comprehension. If you know what a short sale is, I don't know why you would post an owner with $40-$50k in equity would probably need one. I didn't assume this seller was in foreclosure. I should have started the last sentence with "Also," since my intent was to try and get you to stay away from Any owners in foreclosure, as any time wasted by wholesalers playing around, or stumbling around thru a short sale process they are not familiar with, simply wastes time, and puts the owner at greater risk of being foreclosed on.

Originally posted by @Wayne Brooks :
@Steve Babiak Yes, a DIL is possible with equity, I misspoke, but wouldn't expect someone with equity to do one, and generally the bank would request the owner with equity to simply sell it, as opposed to taking a DIL.

@Matt Thompson I'm not sure where my grammar is off, but I'm satisfied with my reading comprehension. If you know what a short sale is, I don't know why you would post an owner with $40-$50k in equity would probably need one. I didn't assume this seller was in foreclosure. I should have started the last sentence with "Also," since my intent was to try and get you to stay away from Any owners in foreclosure, as any time wasted by wholesalers playing around, or stumbling around thru a short sale process they are not familiar with, simply wastes time, and puts the owner at greater risk of being foreclosed on.

FOCUS!

I NEVER said the HOMEOWNER asked for a short sale.

The title of your post is "Need Help! Homeowner probably needs a short sale or DIL". I gathered from that heading that You are thinking the homeowner needs a short sale or DIL. What other conclusion could one reach with that heading? I never assumed the owner mentioned a short sale, that seems to have come from you.

Aside from that, a straight up purchase for $85k or so seems to be a reasonable solution. But first verify his loan balance and any other liens, judgments, back taxes, etc. that may also be owed.