How does this work?

needs no work and he said he had priced it as low as he can so there is no negotiating the price. I don't have any comps but the zestimate is $105K, the amount he will sell for (including my 5K).

Birddog Agreement maybe? Anybody?

Bumpity

I would negotiate the deal with the seller, then put it under contract in your name and assign the contract to your buyer for a fee. Will show on the HUD. Totally legit and you are in control of the deal.

Is your buyer cash? Basically it sounds like you would assign a subject to deal.

Michael Mangham
Mentoring/Team Building Nationwide
MD Home Acquisitions LLC

No, the buyer is not cash, but they can put down $10,000 (or they said possibly $20,000 which is what the seller really wants).. So if they can put down $20,000, he will have his equity and will deed the property to them and they will take up payments. I asked him if his mortgage was assignable, but did not get a straight answer. He just told me his attorney would work it any way he wanted. ??

I have to call the seller tomorrow and let him know I have someone who is interested and that we will need to put it under contract and then assign it. He is an investor too, but he's 80 years old and stated that he just wants to get his equity and be done with it. He said he wasn't going to invest any more.

Shirley

You will almost never (probably never is more like it) see a loan that is "legitimately assumable" anymore. That is why Michael says to do it as a Subject 2. This way you will write it up for the balance of the loan plus the $20K that the seller wants subject to the buyer taking over the current loan. (hence the name Subject2)

Then in your assignment contract you will specify that you will receive $5K for assigning your rights to the contract.

Karen

I thought that's what the guy was referring to...(he's had more experience than I have) when we talked on the phone. He was asking $99,500 which is $20,000 (his equity) plus $79,000 (his loan balance). But he said he would change the purchase price to $105k so that I could get $5000 out of it. I guess he knows how to do that on the contract for closing. I personally don't know how he will write the $5000 into the contract to specify that I get it. Do you?

Shirley

Another question about subject to's. Does the buyer have to qualify for the loan when he takes over the loan? that sounds like a dumb question, but I don't know the answer.

Shirley

Okay, so I call the seller back (an investor) and tell him I have someone interested in his property and I'd like to put it under contract and then assign it to them. He gave me every excuse in the world not to put it under contract until they look at it. First he said, why go to all that trouble until they look at it? I told him it's called protecting my interest. He said well, I'll add $5000 to the purchase price and you'll get paid at closing if it closes. I said I still need to put it under contract first. I told him they might want to do a lease option because they weren't sure if they had all the down payment he wanted (his equity of $20K). He reiterated again, there's no use in drawing up a contract until they know if they can buy it and they need to see it first. Finally I found out the bottom line was he didn't want to take it off the market for 14 days. So I said fine, if you don't want to do it that way, let's do a bird dog agreement and you pay me $5000 if they close. Call it greed or call it unethical, but there was no other way. At least there is negotiating room if they cannot come up with the whole down payment. I will be willing to cut it in half. I was going to assign it for $5000 and he wouldn't have even had to pay anything. Of course, he's not going to anyway because he's adding the $5000 to the purchase price. Oh Well! We'll see how it goes. I'm supposed to meet him at 4:30 today to sign the bird dog agreement.

QUESTION: You knew I had one, didn't you???

Does the bird dog agreement have to be notarized or anything to be considered legal. I think the answer is no, but what do I know?

Shirley

On the last page... Party receiving services
John Doe________________ (Buyer Seller)
By:________________________________
Name:______________________________
Phone:_____________________________ etc.

I know the Seller is the party receiving services, but what is the By____________ for under the buyer's name? Is that in case someone else is signing for the Buyer? Like a POA or something?

Hi Shirely, Michael is right and Bird dogging is a good way too.One has to wonder if this seller is serious about selling, all the details will be out on the table for all to see if the deal goes through so what is the seller so concerned about, wishing you the best and keep us informed on how tis one goes, Jim

Shirley, this is a great and very interesting case. Please keep us up to date with all the details. I am learning so much from this sale and buy and at the same time confused. I also want to thank you for keeping us involved.

sphi99 wrote:

Another question about subject to's. Does the buyer have to qualify for the loan when he takes over the loan? that sounds like a dumb question, but I don't know the answer.

Shirley

The buyer doesn't have to qualify with the bank. In fact, you don't really notify the bank that he is taking over because that could trigger the "Due on Sale" clause.

Either the seller or you will probably want to qualify him/her. Cking his credit, his job status, past rental history, etc. His credit is probably not going to be perfect or he could just get a loan himself, but you want to look to make sure he hasn't been evicted for nonpmt of rent and that his black marks on his credit were not real recent-that he is financially able to fulfill his duties in taking over the loan and is trying to improve his credit by paying recent bills on time.

The "By" would be used if you are buying under your company name. On Buyer/seller line you would put ABC, LLC and then sign BY Shirley Phillips.

You don't need to have it notarized but you should take it to the title/escrow co that is closing the deal and they will cut your ck. That way you will be guaranteed to get your money.

Karen

Good luck, I hope all goes well and it becomes an awesome deal for you!

Give us the good details later on, when you can

The "Comps" (comparably priced properties) don't matter if you have a buyer and seller. SoundS like an easy 5,000 except for the lawyer part. Comps can be checked on Zillow or many other websites just as an idea of what it's worth. It may be valuable info if you need to find another buyer.

James

Thank you. That makes perfect sense!!

Thanks! I sure hope it does too.

Shirley

I did check comps on Totalview, but since that wasn't going to be an issue in selling this subject to, it really didn't matter. We will be helping someone get into a home without a bank and that's BIG!

Shirley

Yes, I think he is serious. He just doesn't want to have to use any of his money to pay me and he wants all his equity out and then he doesn't care how they buy it, whether it be L/O or subject to. I'll keep everyone posted as to how it goes!

Shriley

To be sure he gets his $20K equity and enough to pay me, he raised the down payment from $20K to $25K and the asking price to $105K. He has decided to do a subject to and that's not really a bad deal for the house and 1 acre and no bank qualifying. I tried to contact the interested party but could not get in touch.. Will try again tomorrow. If they aren't interested after seeing the property, I'm sure I can find someone who is.. Keeping my fingers crossed!!