I have a motivated selling with very limited option right now, she upside on her loan and I review short sale as an options for her. Now my questions (I’m still new in this game) is how do I start this process to get a short sale for her? As a wholesaler can I make money off this deal?
You’ll be entering an area where a real estate broker license is needed, I.e., acting as the sellers agent.
@Phillippa Gilkes Short sale would have to be initiated by the seller and approved by the bank. They will list it on the MLS and you can offer to buy it at that point. Of course, they're going to make the highest and best offer which could be you or someone else. As a buyer, you would have to have your financials in order: loan approval by your bank, bank statement with the downpayment and reserves ready to go.
I've bought short sales before and it's quite a process. Not a wholesale proposition as Don mentions above.
@Phillippa Gilkes As a wholesaler there isnt a whole lot you can do if your seller is going to try to get a short sale. A few things to consider: 1. Banks dont have to approve short sales, they can choose to deny and just foreclose so your seller should be prepared for that possibility. 2. The only option for you as a wholesaler is to buy the property and then resell it. Banks typically put deed restrictions in place that limit what can be done with the property after purchase. Also once you are under contract, you cannot assign to another buyer. 3. Have you run the numbers as a potential subject to deal? A deal like that, if the numbers make sense, can be wholesaled to an investor.
Since you are new and dont have a lot of experience you might want to consider partnering with another investor or wholesaler on this deal so that you can learn but also be able to help this seller. The last thing you want to do is make a mistake that causes this seller to lose their home. Good luck!
As Lydia said, see if the numbers work for "Subject To" (purchase is "subject to" the underlying loan), where the loan stays in the name of the current owner, but the deed transfers ownership. If your purchase contract is assignable ("...buyer and or assigns...") a sub-to contract can be "wholesaled". Why would the seller want to leave the loan in their name, you ask...? Because you (or your buyer) would be making consistent, on-time payments on their loan and their credit will benefit from that. What is to keep the buyer from walking away and letting the lender foreclose...? They will have to pay all of the back payments, late penalties and fees at closing and they will not want to lose that $.