Possible Deal. Need Help!!

It would have to be a short sale if the price is less than the amount owed. You would have to negotiate with the bank directly for the lower price and the terms. I did one once - had a realtor pull comps for me and we presented those to the bank and it took about 6 months. I think $180k in this situation is way too high but the comps will dictate the price for negotiating.

Tom

what state is this in???

In my opinion, I would walk away from it because the numbers dont work, but it wouldnt work anyway unless it was a short sale and the bank accepts like 130k.
The only other stratedgy that I see working if your insistant on the deal is if you do a hostile takeover and can rent it for more than the mortgage is, if you know that the price will again eclipse the current monies owed once the market turns. You could lease option it to your end buyer. But I would suggest staying away from that on your first deal.

Think carefully before you make a decision.

good luck and congrats for taking action.

Richie

Hey Tom,

In regards to the short sale I was trying to just allow my clients (tenant buyer) to deal with the bank at the end of the lease option terms that I would create. The big issue here is that the comps aren't matching the asking price. I am not very familiar with short sales so if you could help me out a little with that it would be great. If the seller took a $50,000 loss and decided to sell at the assessed value, would it still have to go through the short sale process? Do you think the only option is for the seller to take a $50,000 loss in order to completely wash their hands of the property and then maybe pay the bank the outstanding balance? I am trying to give them some options, but things just aren't looking that great.

Thanks again for your reply,

Frank

Hey Kimmie,

The property is actually in Alberta,Canada.

Thanks,

Frank

Hey Richie,

I was trying to put on the thinking cap and exhaust all possibilities before I walk away, but I am running out of ideas. The problem with taking over and trying to make the rent payments higher the mortgage is that the mortgage payments are really high. I am trying to do a lease option with it, but I was thinking that I could possibly provide the seller with the option to continue to pay part of the mortgage along with property taxes. This would still prevent them from losing as much each month. What do you think about that? It is a tough case for the first deal, but if this one can get figured out the next deal will be just that much easier.

Thanks for the reply and advice,

Frank

Hi Frank,

With a short sale the bank has to agree to a lower price than what is currently owed. In general, there cannot be a sale or title change because of a "due on clause" clause in most mortgages...basically it says the $200k mortgage is due at the time or sale or change in ownership.

You can certainly write into the lease option the lower price (i.e $130k price even though $200k is owed), but I don't see why the tenant buyers would accept it. Basically they would have a big headache to deal with at the end of the option because they would then have to deal with the bank and negotiate the short sale. It would also be hard to negotiate it now. Banks are open to short sale if the comps show it and if they may have to foreclose on the house. But they generally want to see a cash or approved buyer, and ready to close now.

My opinion is to pass on this - too many complexities.

Hope that helps and feel free to contact me if you have further questions.

Tom

Frank, While I appreciate what you are trying to do. I would say from a business point of view, this is not a deal I would touch. You may be helping a friend or family member which would mean you are emotionally involved, other wise I cant see why you would want to stay with this deal as far as a business decision is concerned.
If the owner can afford the payments ,why would they walk away no matter what the house is worth, the market will rebound eventually and the house will be worth what was paid for it again.
That being said, I do have an idea if your insistant on helping this owner.
You said they were willing to loose the money on the deal, So, the only thing I can tell you is they were going to pay the difference in order to pay off the note or the bank is not going to accept the sale.
In this case the only other option I see by thinking a little outside the box is asking the owner to take out a personal loan for 50k to pay down the the balance and then you will have the house at around 150k to sell to your end buyer. But I cant see anyone doing this if they can afford the home payments now.
good luck either way.

Richie

I appreciate all of your knowledge and advice. I agree with both of you and I don't think this is a workable deal. The only positive thing I have seen out of this deal is the location. I am going to pass on this one and move on to the next. I will keep plugging away until I get a deal done!

Frank

I have been on two different posts and have found these shoe sale ads at the bottom of each one. WHAT GIVES!

I ALSO BEEN ON 2 DIFFERENT FORUMS AND HERE IS THIS DAGAGA PERSON TRYING TO SELL HER BOOTS AND SHOES AGAIN!!! ARE WE REAL ESTATE INVESTORS OR DAHH!!!

I am looking for information on apartment buildings or complexes. Does anyone have any information? Use the 'reply to author' or send me a private message. I need this information badly and ASAP!