Give Me Your Opinion On This Deal.
I have a deal that I am looking at and want to see if anyone can give me any input.
The house is in the mountains and has 2 acres. FMV is about 250k. The current owner has 2 mortgages. The first is for 193k and the second is 48k. The owner is behind 8k on the first and 1500 on the second. The first is foreclosing. My plan was to try to short sell the second (not sure how much) and then bring the 1st current and buy the house subject to. I have a renter that would be interested in renting the house for atleast the next 2 years. I like the area and would be interested in keeping this property for the long term.
I wonder how well that would work on a house with only 10 or 15k worth of equity in it...
Get enough people together and auction fever takes over and a property with no equity will sell for value and more.
jam200
I have seen properties go over FMV, the best thing to do is have a Professional Auctioneer evaluate the property.
Yes and has been said auction fever takes over and between the Auctioneer and Professional Ringmen, it happens quite often.
[addsig]
Chirs,
I am in contact with a few hundered Auctioneers on a weekly basis, so your input on how auctions work and that the MLS is the answer, it seems to be the typical answer from a real estate agents who has no concept how auctions really work.
I believe NAR says that by 2010 that close to 50% of all houses sold will be through the auction method.
Austrailia booted the MLS system 30 years ago and use the Auction Method almost exclusively to sell properties. It is working great by the way.
So between Wal-Mart and Auctions you must be feeling the pinch.
John $Cash$ Locke
[addsig]
John,
Actually I thought I was saying that an auction was a good idea, and that a property often gets a higher price at auction than on the MLS. I merely added that in local experience, putting a reserve price on the property seemed to discourage bidders.
Chris
Here is how Australias last good idea went. ( I apologize in advance to all the liberals)
http://www.breakthechain.org/exclusives/australiaguns.html
New construction buyers would not do what?
http://www.builderonline.com/industry-news.asp?sectionID=0&articleID=434516
John $Cash$ Locke
[addsig]
ardyk,
Glad to meet you.
First it sounds like you are behind in payments. If so will this investor bring your payments current?
You are referring to a Subject To deal, or the investor purchases the house (receives the deed) "subject to" the existing loan staying in place. Which, since you posted in the Subject To forum you probably were aware of this.
This type of investing is done all the time, the big question is the investors credentials, is there anyone you can contact who he has helped before? Sometimes investors doing this type of investing have all good intentions, what disturbs me with what you described is he says he will take the house within 12 months anyways.
The problem with the above statement is, once you sign over the deed he already owns the house, so is he saying he will finance the house personally after 12 months?
Trying to give you a perspective of some due diligence you need to do concerning this investor.
In your particular circumstance it maybe your only way out of foreclosure, just make sure the investor can do what he says he will do.
John $Cash$ Locke
[addsig]
I have been advised that this will violate most due on sale clauses.
How can a Deed in lieu not work?
King,
I just had a lender allow an assumption. I have to admit, though, it helped that my Buyer has a FICO score of 838 and the loan is current.
[addsig]
Yes this is done all the time and maybe a good option for you only as a last resort. It is done all the time with the idea of you just dont tell the bank.
Buyer is trying to buy the home with little or no money out of his pocket and trying to resell for a profit. If he does not sell he does not have much to lose.
The more he has to pay down the better protection you have he will not let the bank take back later and lose his investment.
Is violating the DOSC a crime?
[addsig]
When looking at the DOSC wording and the word Violate, I find no law that has been broken or actually do not find any law regarding any type of penalties except the loan may be called at the lenders option.
The word violate unless someone can show me a specific law that makes it a crime to take a property Subject To, then the word violate is not apropos in describing taking a property Subject To.
transitive verb: -lat•ed, -lat•ing, -lates.
1. To break or disregard (a law or promise, for example).
2. To assault (a person) sexually.
3. To do harm to (property or qualities considered sacred); desecrate or defile.
4. To disturb rudely or improperly; interrupt: violated our privacy.
§ 1701j–3. Preemption of due-on-sale prohibitions
(1) the term “due-on-sale clause” means a contract provision which authorizes a lender, at its option, to declare due and payable sums secured by the lender’s security instrument if all or any part of the property, or an interest therein, securing the real property loan is sold or transferred without the lender’s prior written consent;
(3) In the exercise of its option under a due-on-sale clause, a lender is encouraged to permit an assumption of a real property loan at the existing contract rate or at a rate which is at or below the average between the contract and market rates, and nothing in this section shall be interpreted to prohibit any such assumption.
Part (3) is where an investor could call the lender and get permission, here again if it does not violate any law as a lender is not a policing authority and they are allowed to make this decision.
In the question asked what it looks like to me this person is going to lose their house to foreclosure, what I advised was make sure the investor helping them was qualified to do so.
In today’s marketplace maybe some people are not aware of the amount of foreclosures going on and personally I doubt lenders are out there calling performing loans due.
Words used in selling courses are chosen by marketing people or what helps separate one persons course from another. You will always have the ones who say “flipping” is illegal and this is true the way the government looks at it, however if you say wholesaling then this separates unlawful from lawful.
The creative real estate industry as a whole would be better off uniting in their efforts to help house owners, than throwing around words that have the governmental agencies passing new laws that harm the honest investors.
I just corrected a poster the other day who used the term “hook’ the seller. I am not aware whether this person purchased a course or not, however what concerns me is that with in-fighting within our great industry it is in effect having new laws passed that will in essence effect our industry as a whole.
For certain this along with investors who are not trained properly or are just let’s say lacking in morality and ethics.
John $Cash$ Locke
[addsig]
Very well-said, John.
[addsig]
Is it legal? Of course -- in fact selling is much preferred to a lease option if your state has a rapid and simple foreclosure process. However, as you picture it: taking a second mortgage for your profit, is not the recommended course of action.
The better solution is to sell on a Contract for Deed or a wraparound mortgage. It is one payment, simple for your buyer and you remain in a better position of control.
With owner financing as opposed to a L/O, you can get a higher down payment and you have a higher percentage of cashouts.
The determing factor is that if you are in a judical foreclosure state that takes months to foreclose, the L/O may be the more practical route.