Can This Be Done Or Is It Legal?
sign purchase contract with seller currently in foreclosure for $230,000
loan balance including late charges and fees are $200,000, sellers wants 30,000, repairs are $6,000, Arv is $350,000 at the low end.
what I want to do is find a end buyer before closing. lets assume buyer will offer $345,000. I want to offer 100% financing and then sell mortgage note at closing so that I can cash out.
can this be done? is it legal? would the fact that the house is in foreclosure effect the deal? And how would I structure the closing so that it can all be done with me only paying my set of closing cost.
just an idea. feedback is appreciated.
It really doesn't matter if its legal or not... What matters is if you will make money on it and not get caught!! I'M KIDDING OF COURSE!!
I am assuming you are going to be doing the repairs yourself before attempting to sell it for $345,000 to the end buyer? Or are you going to sell it as "handyman special"?
If I were you, I would sell it "as-is" to a handyman (for $330,000 if your market really could get it for $350,000) and get someone in there right away... They would be building immediate equity as well as sweat equity as soon as the repairs are done. AND you still make $100,000 or so...
You need to find out to go about getting this out of foreclosure... Hopefully someone on this site will direct you as this is not my specialty...
GOOD LUCK!
[addsig]
It seems that your biggest problem will be synchronization -- not legality. If you break this down into steps you want to
1) buy house ($230K)
2) fix-up ($6K)
3) sell house ($345K) w/ 100% financing
4) sell note for cash
I assume that your motivation for a simultaneous transaction is that you don't have enough cash to do this sequentially. Your challenge will be to get all of the Pandas in the cage at the same time! If you can get the note buyer lined up to put his cash in escrow so everyone gets paid, you may have a shot at this. You should probably have the fix-up done before closing or give an allowance to the buyer to do the fix-up after closing.
An alternative might be to get a hard money loan up front. I know there are lenders that will cover 65% of ARV. This money is fairly expensive, but you will need it for only a short time (hopefully)
Regards,
Ed
The main issue with foreclosure is that the sale take place before the foreclosure sale date. Usually this can be up to one day before the scheduled foreclosure, but you will need to coordinate this with the lender.
On one occasion I have gotten a lender to postpone the sale for a month while I got my financing by giving them irrevocable cash. The cash was credited toward the payoff of the loan as long as the sale was completed withing 30 days. We closed on day 29!
thanks for your imput
I agree my problem would be timing the transaction.
i would sell the house as is to my end buyer at the same time I purchase the house from my seller and of course give the end buyer an allowances for necessary repairs.
I am not able to fund the closing of the foreclosure deal in order to close with the end buyer.
What I want to know is if I would be able to get someone to buy the note at closing thereby eliminating my need to have cash except of course closing cost and fees. and also how would this be accomplished at closing. meaning how would I schedule the closing so that the transaction goes smoothly. My seller knows I would be reselling the house and my end buyer knows she will buying house I just brought at foreclosure.
You have discovered the long pole in the tent. The key person in this is the note buyer since this is the elephant (person with the big money) in your transaction. The note buyer needs to be lined up early so due diligence can be done on the property you are acquiring and he/she feels secure about buying your note. I would start looking for the note buyer immediately.
You might talk to someone in your area who does escrows and discuss the coordination of this (in CA title companies would be a good choice).
Regards,
Ed