Preforclosure
Lets say i get a deal with a homeower to purchase their property. Their property will be sold at the auction in 2 or 3 www.weeks.I need to know the next step to take in this process. I know i have to have a contract made with the www.seller.Is there a special contract i need to have? Is there special forms i need to fill out?Then i have to call the lender or bank and try to get a postponement on the auction, correct, to give me more time to do the deal? I have to have a authorization for release of information, signed by the seller, to give to the bank, correct? Then what? What do i say in the contract for any cash the seller may get at closing? If someone could help me out on the steps or process of a preforclosure, i would very much appreciate it! This would be my first deal,i am pretty new at this. I just want to know what to do when this situation comes up??????
Mikki,
To do a short sale (I think this is what you're looking to do):
first, meet w/ sellers: I take with me several things for seller to sign: 1) a deed, deeding property to a trust (gives some security in this deal, ie, once you put time into the process, they can't sell to someone else, although this depends on the recording rules of your state)
2) purchase and sale agreement- 2 copies, one for you to keep and one to send to bank w/ short sale package.
3) Escrow letter
4) Disclosure agreement (saying you are making your best efforts to buy property, but making no promises)
5) authorization to release info/ limited power of attorney (which one you need depends on lender, auth. to release seems to be fine for most)
I get the seller to sign all these doc's right away...even if they're blank (if they're motivated, they'll sign anyways...give them copies later). Also, take pictures, examine house!
Then, call lender loss mitigation....fax them auth. to release info. Get payoff amount, ask what they need for short sale, or have them send ss package. Prepare necessary documents (hardship letter, financials, HUD-1,etc.) and make your offer and send in. Please note: you can't have the seller getting any cash if you are doing a short sale. (You may offer them cash for personal property within the house, but this is seperate)
Then, see if lender is willing to negotiate or accepts. The lender may postpone auction, but often depends on state laws for foreclosure...my state requires the lender to start all over if house is pulled from auction, so Lenders won't postpone. If you only have 2-3 weeks before auction, you will have to rush, b/c BPO has to be done, etc, all after you submit ss package.
Hope this gives you an overview. Good info available on this site and RE gurus, esp. Ron Legrand, Jeff Kaller.
Good luck,
Beckie
You might find some usfull information about CA here:
http://www.thecreativeinvestor.com/ViewTopic40412-18.html