I'm sure this has been asked and answered several times but I am a bit curious on how to handle this particular situation. Just wondering if someone can walk me through this scenario. Thank you
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I'm sure this has been asked and answered several times but I am a bit curious on how to handle this particular situation. Just wondering if someone can walk me through this scenario. Thank you
I'd like to know how this is done I haven't found any replies or teachings from anyone who did this .My wife and I have seen some awesome houses on prop trend were they owe more than what the house is valued at .
I am amazed by the inspiration of people who have been influenced by this man and the people he has inspired
Unfortunately there is not much you can do. If they are upside down the best options are to find out what they pay monthly and see if we can do some sort of lease option or seller financing with them.
If the payments are too high to be able to do this then we can recommend they talk to the bank and see if they can do a short sale.
That wont necessarily get you the property but it would help them out.
If the bank allows them to do the short sale then you can make an offer at that point and try to get the deal.
Just as EROSQUIST1 mentioned above the deal wont make sense for an investor, who would want to pay more for a property than its worth. There wont be any profit. Maybe if you catch the seller in the beginning stages of not keeping up with the mortgage you can MAYBE do a lease option if the numbers work. The best advice you can give to the seller is to go to the bank and ask for a short sale. When properties are upside down on their mortgages I stay away from them.
Reynold Orozco
There are some ways that you can work with these properties, but we caution you in advance that there are more moving parts, more time required, and no guarantees regarding outcome. Here are the steps for offering on a potential short-sale deal.
1) Make your offer to the seller at a price that would be acceptable for your cash buyers, with a contingency that says: "Subject to approval by Seller's Lender(s). The offer also needs to have the following additionally modified components:
A) Inspection Contingency to state: "Subject to a satisfactory full inspection by buyer and/or associates within 14 business days following approval of agreement by seller's lender.
B) Closing within 30 days following approval of agreement by seller's lender.
2) Obtain a "Release of Information" or "Limited Power of Attorney" from seller so that you can be involved in discussions with the mortgage lender(s).
3) Contact the Asset Department of the mortgage lender, assist the seller in following their instructions for submission of a short sale packet, including as one of the exhibits your signed purchase agreement for their approval.
4) Lenders may or may not accept the short sale, and may not be very quick in completing their evaluation. Be persistent in follow-up, but not to the point of becoming a pest.
5) If the offer is accepted by the lender, proceed as per any other transaction. If the offer is not accepted, the clauses above will allow you the right to terminate and receive your Earnest Money back.
The amount of time required for these types of deals makes them less than ideal as a regular practice, but you may occasionally want to see if you can get one accepted. We never know what is going on behind the closed doors of a lending institution, or how receptive they may be at any given time to short sale offers. So we need to just keep trying and see what gets accepted. It's like testing spaghetti to see if it's cooked, you throw a noodle against the wall and see if it sticks.
Dallin Wall
Real Estate Training Team
Forum Blog Location--A collection of my
"Best of" posts:
http://www.deangraziosi.com/blogs/dwall
If you are making an offer on an underwater mortgage and are offering (of course) less than the balance on the loan, this will require the lender to accept a short sale. This means that all offers need to be approved by the owner's lender.
This complicates matters greatly because: (1) Most lenders will not allow you to assign a contract. (2) Lenders will not greatly discount the real estate - especially more than market value which reduces the profitability of your deal and (3) These deals take months and months which increases the chance of losing your end buyer.