seller owes near MV in foreclosure..options?

Question

Hey!

I am used to just doing regular wholesalers, but I am working with a seller who has a couple properties they want to get rid of .. They owe about 100k and the property is worth about 110-120k and are in foreclosure. They have there first court date coming up, how can I get rid of these and help them since my cash offer would be around 70-80k..?  What options do I have?

Thank you!

John Whitmore

Bill Gulley · Answer

Good call! Might search "short sale no equity" as there should be lots of information. Never buy with a quit claim deed in such circumstances. Any time a notice of foreclosure has been given I suggest you deal with a short sale Realtor or an attorney, investors can get sideways easily. :)

Brian Gibbons · Answer

You cant wholesale for cash a no equity deal,

you can:

1. Sub2 with or with a land trust

2. lease option and assign or lease option sandwich

3. buy on terms like a wrap or a contract for deed (installment sale).

The lien is in trouble though.  What does it take to cure the note?   All costs and fees, not just all the back payments.

I would walk, cuz the note is in default and there's no equity.  NEXT!

And, tell the sellers to get an attorney, try for a Deed in Lieu or equivalent.

Bill Gulley may want to add something here.

Account Closed · Answer

Awesome guys, yeah this may be one I will pass but thank you for all the responses! I will give this to my short sale lady and see if she can work something out

Wendell De Guzman · Answer

I agree with @Wayne Brooks: the seller quit claiming the property to YOU, the investor on a property about to go into foreclosure could land you in jail.

Shortsale is a viable option but when has the seller last made their mortgage? Keep in mind shortsales can take 6-9 months (even 12 months). If this is late in the foreclosure stage, the property might go into auction even before the shortsale gets approved. If this is the case, a good foreclosure defense attorney can defend the case and buy you time for the shortsale.

Account Closed · Answer

Roy, yes I would like to step out of the deal all together and that would be wholesaling a lease option which I looked into before but never did. I think this is the type of owner where he doesn't even want to be bothered, but I can always suggest it.

Wayne Brooks · Answer

John, yes I've heard of having the owner Quit Claim Deed the property over to an "investor" who rents it out, with no intention of paying the mortgage, until the bank forecloses.  It's called rent skimming, and is a Felony.  It's not a new trick.

Roy Schauer · Answer

what about a lease option where the option payment pays the reinstatement amount and puts a little bit in your pocket. Structure the monthly rent to pay mortgage with a little extra in your pocket, this depends on rents in the area. And then collecting the difference in sale price on the back end. If structured right, can help rebuild the sellers credit and puts some money into your pocket every month. Or structure the documents for the buyer and charge an assignment fee and step out of the deal all together after its set up.

Account Closed · Answer

Got it yeah that is what I thought, especially if it is in foreclosure not much I can do except short sale. I have heard of a couple buddies of mine quick claiming the deeds over to them and renting it out until the foreclosure hits? I don't know how legal that is but they are collecting 1200 a month in rent while they delay the foreclosure ever hear of this?

Wayne Brooks · Answer

John, you can't unless they're willing to come out of pocket for the difference.  Otherwise a short sale, but you won't get the discount you're looking for.  Most people in foreclosure owe more than they think with accrued interest, taxes, force placed insurance, etc.

seller owes near MV in foreclosure..options?

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