First Preforeclosure Deal...need An Advice!
I'm in Los Angeles CA.
I have a motivated seller with about 20 days before his house is going to be sold at the court house.
FVM: 650K
1st: 480K(foreclosing)
2nd: 70K
3rd: 45K
The questions are
1. Should I take it "subject to" , transfer the title ( what paper work do I need for that?)and try to release 2nd and 3rd ( is there enough time? ).
2. Also besides "Standard Purchase and Sale agreement" and “Release of information" documents what other paperwork do I need?
3. Should I put property to the land contract? And then make the owner assign the beneficiary interest to me to avoid due on sale clause?
4. Any other ideas what should I do with this deal?
Thank you everybody.
1. get the deed
2. get the second to discount heavily
3. reinstate the first
4. wholesale the property for cash
steps 2 & 3 require cash outlays.
You're asking for someone to teach you everything you need to know about Preforeclosures, Subject To and Land Trusts (not Land Contracts...very different)....all in 20 days???
You may be able to pull this off or you may end up in a world of hurt. My advice would be to birddog this lead to another investor for a fee AND ask if you can ride along to watch how this gets done.
It looks as if there is sufficient equity that you likely will not be able to short sale. $480+70+45=$595,000.
Personally I think you will have better luck bidding at the sale. It is unlikely that the 2nd and 3rd mortgage holders will show up to bid. In my state only the foreclosing party submit a written bid from what I understand.
The problem with the sale is that you will likely have to close with all cash. You can attempt to short the 2nd and 3rd to some degree. My experience is that is very easy to short junior liens. You may mention that the homeowner said something about a large mechanics lien or something which will make it appear that there is no equity. This is a question of ethics though.
GOOD LUCK. I'm confident you can make a lot of money here!
I went to a one day on this and I was told that at foreclosure the junior leans are wiped out complely. That makes them very motivated to do a short sale, so they are willing to take as little as 10%-20% of the amount owed. Worth a try.
Good Luck
Sounds like a great deal if you can get the 2nd, and 3rds to give you a payoff letter for less than is owed. If you are set on trying this, I would suggest having the homeowner sign the deed over to you. After you have some control over the property, contact the 2nd and 3rds, and speak with them about setting up a deal. ("im a friend helping out the homeowner, there is only 20 days left and as you know, you would lose all interest in the property after the 1st forecloses. would you settle for 5%, and give us a payoff letter stating you are satisfied?"
If you can get the 2nd, and 3rd to do that, than you should not have a problem getting the house for a great deal, AND helping out the homeowner in the process.
Good luck, hope this helps.
sashetz2,
what happened to this property?
did you bird dog the deal, try it yourself, or just move on?
thanks,
allcash
Thanks a lot all you guys. I will keep you updated on this deal.
Another question I have another possible deal with about 6 days before sale.
FMV :350K
1st : 141K (foreclosing)
2nd: 48K (is 6 days enough to short sale?)
This guy is super desperate. What should I offer?
Thank you.
Alexander.