I want to buy back my first home....Short Sale..Buy and Hold in Maryland

15 Replies

Hello BP,

Several months back, I saw the first home. I purchased at 20, up for sale again.  The lady I sold the house too was short selling it.  Unfortunately, no one purchased it and it was not listed again. I was thinking of buying and holding this property.  What do I do? How do I approach the owner.  What are my steps? I would really like to hear from someone in Maryland that could help me?

Thanks,

Tasha

Anyone? 

Patience, @Tasha Mckoy. ;)

I'm on the left coast, clearly not anywhere near MD. I hope that doesn't matter too much. At least I'm responding.

Can I ask you why you want that first house back? I mean it's none of my bee wax, but if you want it as an investment, there might be an emotional attachment that could cloud your decision making.

OK, I'll assume that your motives are purely business. Further, I'll presume that this is a killer deal, provide you can get it at the right price and you figure that you can. In that case give the owner/seller a phone call to ask if she's still interested in selling. If not, then buying anyways would be a non-business decision.

If the seller is interested, ask why it didn't sell during the short sell. Did the bank disapprove the price or were there just no offers? Is the place about to go into foreclosure? What is the least the seller would consider in order to sell? You see? You've got to contact the owner. If you do it right away and the seller is motivated, then you have the no competition and should be able to negotiate the lowest possible acquisition price.

Post and update when whatever comes of this happens. I'd be interested in hearing how this shakes out. Let me know if there's anything I can do to help.

All the best.

@Tasha

I am a  Realtor in MD. I live in Clinton and may be able to help you. How long ago was the house listed, any idea? 

@tom

Yes, I do have some emotional tie to the house, but despite that, I think it will be a good buy and hold property.

I plan to go talk with the owner soon.  I think I will send her a letter.

I also wondered how I would get financing.  How do I contact her mortgage company?

@Nii

Thanks for your offer, but I am also a licensed agent in Maryland.

you get financing the same way you normally would. I've bought a short sale before and BOA loaned on it. 

Also, her mortgage company wouldn't sell you the house if she doesn't want you to buy it. It will go to sheriff sale first. Contact seller directly not her bank. 

Good luck and let us know what happens!

Thanks @Josh

Originally posted by @Tasha Mckoy :

Yes, I do have some emotional tie to the house, but despite that, I think it will be a good buy and hold property.

Are you sure it is a good Buy and Hold property? I know MD taxes can be high enough to make SFH rentals a tough go.

What are the numbers on this place? I would find out exactly how much the following expense are going to cost you each month. "The tenant pays" is a good answer as well. You have intimate knowledge of the building and the surrounding area, which is a rare advantage in this business.

Taxes

Sewer and Water

Trash

Heat/Utilities

HOA

Cap Ex and Ops

Insurance

Mgmt Fee - as a % (general consensus here on BP is 10%. include it even if you think you are going to self manage)

Vacancy- as a %. (8% represents 1 vacant month/unit/year)

 @Aaron Montague

Hello Aaron,  

I've been listening to the some BP podcast and maybe wholesaling could work. I'm curious to know how I could wholesale it. The area is very competitive when it come so investors fixing and flipping. All of the properties in the area that are REO are purchased so quickly. What do you think about that idea? I plan on reaching out to the owner by a letter to see if she still wants to sell it. I've just never heard of wholesaling a short sale. Are banks eager to sale it under retail value? I'm sure the banks see the market in the area. So maybe they won't sale.

Hi Tasha,

I am a broker in California, but short sales are short sales. In order to do a short sale, the property would need to be listed. Many lenders require a copy of the MLS printout. The all require a copy of the listing agreement. There are also some that have an arms length disclosure, that will not allow the listing or selling agent to be the purchaser. If she is still interested in selling and cooperating with the process, you need to find out who the lender is, and if they have an arms length affidavit. I have closed more than 130 short sales, and have had an arms length affidavit for EVERY one during the past 2 years or so. You will want to see the wording. Even if they allow you as an agent to purchase the property, they will not allow you to receive a commission. You may be better off having someone else list the property so that you can purchase it. Good Luck

Hello Tasha,

Laura pretty much broke it down for you perfectly. 

Hi Tasha,

I don't see that anyone has yet mentioned this with regard to your question about wholesaling a short sale. If they have, I apologize for the duplication. I am new to wholesaling, but I do not believe one can ever wholesale a short sale. The lender, in already agreeing to accept an amount below what is owed, (the short sale price) would not then allow assignment of that contract to a third party at a higher purchase price with the additional cash going to a wholesaler. I'm sure that if I'm wrong, someone will correct me, but it makes sense, I think.

Originally posted by @Barbara Riley :

Hi Tasha,

I don't see that anyone has yet mentioned this with regard to your question about wholesaling a short sale. If they have, I apologize for the duplication. I am new to wholesaling, but I do not believe one can ever wholesale a short sale. The lender, in already agreeing to accept an amount below what is owed, (the short sale price) would not then allow assignment of that contract to a third party at a higher purchase price with the additional cash going to a wholesaler. I'm sure that if I'm wrong, someone will correct me, but it makes sense, I think.

True that it would be difficult to "wholesale"a short sale purchase by doing an assignment or double close.  Most short selling lenders have a listing requirement and don't allow assignments.  However, there is nothing preventing a buyer from closing on the purchase and reselling at a mark-up.  There are some great short sale deals to be had out there if you actually buy the property, or work with partners who can. 

Originally posted by @Tasha Mckoy :

@tom

Yes, I do have some emotional tie to the house, but despite that, I think it will be a good buy and hold property.

I plan to go talk with the owner soon.  I think I will send her a letter.

I also wondered how I would get financing.  How do I contact her mortgage company?

You can't speak to the lender without permission from the borrower.  Get in touch with the owner and see if she's even interested in a short sale.  If so, you'll need an authorization to release information from the borrower so you can communicate with the lender and confirm the balance and status of the loan. Be mindful that there is sometimes very little incentive for a borrower to participate in a short sale.  If their loan is in default they already have credit problems.  For many borrowers a foreclosure won't be that big of a deal, so there is no need, from their perspective, to jump through a bunch of hoops to short sale their property.  However, if the borrowers are living in the property, short sale negotiations and a delay of foreclosure could be more months of free housing.

Thank you all for the information.  It looks as though this might not be a good plan after all.

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