OfflineSo here is the scenario. I want to know how I can put this home on contract and sell it to my cash buyers but I need help. Im missing something because I cant figure out how to do it and hit all the magic buttons of the seller at the same time...maybe its just not a good candidate...I found a gentleman that needs to rent or sell his house. Like most he would like to hang onto it but isn't sure he can. The Total view estimate is $144,197. He bought it in 2002 and he owes $142,000. His monthly payment is $1200. He is behind 2 months and about to be 3. He is trying to rent it for $1200 a month and is also going to try putting it on the market. He needs to do whatever he does fast so he doesn't go into foreclosure. He needs to get rid of it because he is a plumber and hasn't had any work for over 6 months and now with no notice at all needs to move to Missouri from Washington to be with his kids as they have just moved there. If he owes at this point almost what its worth, there is no way to offer him less and sell it on contract to a cash buyer is there? He would still be owing more than I could get him if my buyers want it at a deep discount. So he needs out quick and is running behind and desperate to do something now. Any suggestions? I am looking to close my first deal myself. Thank you all for your input!
How can I put this on contract?
Posted on: Thu, 07/29/2010 - 01:40
If you haven't already, read Greg Murphey's story in Profit in Your Town.
The most important thing for your seller should be to save his credit by not going into foreclosure. Ask him, if you could bring his payments current, and if you took over his payments until you could sell the house, would he work with you? If he says yes, then have him quit-claim the house to you and sign a real estate/limited power of attorney. Now you have control of the property.
Find an end buyer with at least $3600 down. Take that money and catch up the payments, and set the payment on the lease option at $1400 a month. $1200 goes to the mortgage and $200 goes in your pocket. In your lease option with the end buyer make sure the amount you agree to sell for is more than what you will be paying the original seller. You might not make a lot of money on this deal, but you will make some upfront (whatever you get over the $3600 in a down payment), $200 a month while they "rent", and a small profit when the end buyer uses their option to purchase. This is because the seller has very little equity.
Don't forget to do your due diligence on this! Find out exactly how much is owed on the property before you agree to buy it, otherwise you might end up with more cash going out than coming in. You will need the power of attorney before you call the bank or they won't talk to you.
Hope this helps and good luck!
Rich