Posted by TRandle (TX) on January 11, 2002 at 17:01:10:
Bill,
I was reading between the lines somewhat on Earl’s post. I took it to be two questions. First, how do I ensure the sellers make the payment, and second, what’s a good process for making this happen.
True, if the seller was concerned about being ripped off, then an escrow account could be a good solution to calm his fears. Again, I’ve only recently started “requiring” seller payments within the last few months. However, it’s my experience that someone who’s willing to pay me two or three payments to buy their house doesn’t raise that concern.
The first seller who agreed to this condition, semi-balked at making the checks payable to our company. Since then I’ve just matter-of-factly state that the seller will need to bring the post-dated checks payable to their mortgage company to closing. That comment has met no resistance thus far.
How do you generally handle the payments, when you get a l/o or subject 2 deal and the seller is suppose to make the next 2-3 mortgage payments? Do you have the seller send the payments to you, so you can pay it or do the sellers just send in the payments to the bank themselves?
I have not bought on L/O but as far as Subject 2 goes I have them make the payments direct. I have one guy right now that just wants to write a check for 3 months worth of payments. That deal may not go through but he bought it up to me that way.
As far as the payments I explain that the credit is in there name, not mine. If it is late that is there issue, again not mine. I find this works best with people with better credit.
Those that are far behind are a heck of a lot harder to get to make those payments and I don’t try to get bllod from a rock if the a deal is there.
Posted by TRandle on January 11, 2002 at 10:41:54:
EB,
As you know, I’m fairly new at that aspect. I really don’t think there’s that many folks doing this, but I do look forward to other responses.
On the two most recent ones, I had the sellers provide me post-dated checks made out to the mortgage company. I did not want to rely on the sellers to send the checks in. Fortunately, all those checks went through okay.
They were a bit leery of making the checks payable to us, but had no problem with this method. I’m not sure what I would have done if the checks had bounced - case by case basis, I guess.
I was just wondering…, what would happen if they did not make the mortgage payments. I guess if they had any money coming to them on the backend, you could have a clause in contract stating it will reduce the amt. they receive (2x amt. that you pay for ea. pmt., as a penalty) or you maybe a clause stating that you could cancel agreement if they did not make the payments as agreed.
Posted by TRandle on January 11, 2002 at 12:16:40:
EB,
On one of those two most recent, I did give the sellers a 14k second. The other one has nothing coming to them, and therefore, was more risky. I should have written something down in the contract to the effect that their failure to make the payments nullified the deal, but I only did that verbally.
As to your other question. I wouldn’t think that would be difficult. It’s easy to verify the loan is current after an automatic payment. The sellers can just leave it in place and cancel after their last payment to you?
Posted by Bill Ward on January 11, 2002 at 16:00:02:
Don’t you think that setting up an escrow account and splitting the monthly fee would be the best solution? That way there’s no question as to whether the mortgage is or isn’t being paid. This would also be ideal for an l/o as well I believe. Am I anywhere near the mark on this gents? I’m a greenhorn.