Have a deal and situation I've never done before - need advice before tonight! - Posted by Jen NE

Posted by Richard on February 02, 2000 at 24:02:18:

Sounds iffy to me.
I am not up on the local laws and real estate
customs in your area but…
A Title insurance is required by sane investors
no insurance, no deal!!!
B is this gambling?
C how much can you afford to loose?
D how many properties have you been
on title to?
E he (she) who is in too big a hurry
is first to loose big money

Good luck.

Have a deal and situation I’ve never done before - need advice before tonight! - Posted by Jen NE

Posted by Jen NE on February 01, 2000 at 09:54:57:

OK… I have a pending deal in which I’m signing a contract tonight, but don’t know how to address a couple of things… Thanks for you help in advance :wink:

Here’s the stats:

House: SFR 3 Bed, 1.5 Bed, 1 car detached
Neighborhood: Not bread and butter, but not war zone… Lower end.
Mortgages or other liens: None - paid in full. I have access to the courthouse records.
Taxes: Delinquent. A Tax Lien was sold in 1997 and the Tax Lien Certificate holder gets the property on 3/3/2000 if taxes and interest are not paid in full which is $2,000. So I only have a month!
Comps: Comps run about $35K in good condition. ($40K tops)
Repairs: This place needs everything —paint, carpet, new furnace, new water heater, drywall/plaster work, new gutters, etc… My handyman estimates $15K.
Sellers: Shannon and Gene who are willing to sell it to me for $4K ($2K for them and $2K to pay off the taxes).

They are willing to just sign the deed but…they don’t have it yet. Shannon and Gene are the children of the owner (their mother) who died. There was no will. Shannon said they did not go thru probate yet as she does not have the $300 to give the lawyer. (lawyer said probate would take 2 weeks —remember I have a month before the tax sale).

So here are my questions:

  1. Can I legally sign a contract with someone who doesn’t really have the deed yet? Children should get the house and there is no father. Can I give them a deposit of $300 in the purchase contract somehow stating that they must use it for probate and sell to me? (They are very cooperative and want to get a little something from the house before the tax lien takes it from them). How would you handle this? I need them to get title.

  2. Since it’s not the best neighborhood, I don’t want to spend the money fixing it up and selling (maybe I’m being too risk adverse?)… Thus, I’m opting to assign or do a simultaneous close. I have flipped to other investors for homes in this area where they fix it up and keep as rentals.

My question is —should I wait for probate to be done before I show potential investors?–or can I show them now and tell them the scoop since they would need to close prior to March 3rd?

  1. I always have a hard time deciding whether to assign or do a double close. If I have a purchase contract for $4K ($35K comps - $15K repairs = $20K), should I only assign for $1-$2K, or try to double close for higher, like $5K? I think I know the answer, just wanted opinions… A lot of the investors I flip to ask, what do you have the contract for? —so obviously they gage their offer knowing that (first to name # loses)… How do you guys typically handle?

  2. If I cannot find an investor to buy, would should I step up buy & fixup or sell wholesale to the public?? Just never had a $4K house come my way :wink:

Thanks for all your help!

Jennifer NE

Take an assignment from the tax lien holder - Posted by Rick Vesole

Posted by Rick Vesole on February 02, 2000 at 24:56:30:

Get your deal signed with the children, which will be subject to them clearing title. Also have them assign to you any right to deal with the tax sale purchaser. Then go to the tax sale purchaser and tell him/her that you have a deal to buy the house, and ask if he/she would agree to assign his tax sale certificate to you for the amount of taxes and interest that is due.

You would basicaly have two choices depending on which is faster and which way is easier to get clear title. Either let them go through probate or obtain title by perfecting your tax sale certificate.

deal and situation I’ve never done before - need advice before tonight! - Posted by Paul_NY

Posted by Paul_NY on February 01, 2000 at 18:07:27:

According to Dave Del Dotto’s Tax Sale Property book, Nebraska is a certificate state with a 3 year redemption period. (You already know that). After the 3 year redemption period, the tax lien holder MAY begin foreclosure proceedings. In Massachusetts, the tax foreclosure process can last up to 18 months.
As a certificate holder, he will be entitled to a earn a percent interest on the money he paid to keep up the taxes during the redemption period. The owner may go to the treasurers office at any time during the redemption period and pay the required amount to reinstate his title.

Perhaps you should contact the tax lien holder and try to work things out. (I’ll bet he wants the money more that he wants the property).

As far as probate is concerned, ask a local attorney.

Making money on the resale of the propery:

  1. Buy a used furnace, clean and install it
  2. Make sure the plumbing and electricity work
    Sell it to a family on a land contract for a decent discount, (a price less than the apprised value) and get a down pmt of about 10%. Let them do the majority of the work. They should be happy that they paid less than the appraised value.

Be careful what you spend on these low cost homes. It is easy to spend more than they are worth to remodel them.

Re: Have a deal and situation I’ve never done before - need advice before tonight! - Posted by ScottE

Posted by ScottE on February 01, 2000 at 17:26:22:

Just a few things to add to Joe’s post. Make sure your contract allow you to have immediate and, if possible, full access to the house. This will facilitate your showing to inspectors and repairmen, as well as other investors. You may consider cleaning the place up just a bit (i.e. refuse removal) and placing an ad for a “Handyman special” as opposed to flipping it to a conventional rehabber. Perhpas someone is looking for a fixer upper to live in and can afford to live in it and work on it at the same time.
You may also want to double check your handyman’s estimate of repairs.

Good luck


Not signing contract now until Wed night now… - Posted by Jen NE

Posted by Jen NE on February 01, 2000 at 17:13:27:


Re: Have a deal and situation I’ve never done before - need advice before tonight! - Posted by JoeB(Atlanta)

Posted by JoeB(Atlanta) on February 01, 2000 at 13:00:29:

Hi Jennifer, your deal is a little thin to wholesale in my opinion (that many repairs when it’s only worth $35k is tight)…but here are answers to rest of questions. Most of them assume you have a good creative attorney to help.

When you fill out the contract (you can go under contract now) list sellers as: Estate of John Doe, then (in Georgia) we can have heirs do a simple, non-administrative Probate–takes about $100 and week or two. Have your atty help w/this. But if there are other heirs, expect a long battle and price increase. Put contingent upon Sellers probating will successfully. Don’t give them $300 earnest, if you need to keep it so you can pay for probate!

In Georgia, tax lien holder still has to do official foreclosure after redemption period ends…so on the one hand you may have more time than you think…on the other hand the tax lien holder can add any admin. costs he wants to to total when he enters into foreclosure, whereas during redemption it’s just your states allowable interest on $2000. Or talk to tax lien holder and see what he/she wants to work out and timeframe…prior to going under contract.

I’d show to investors now, cause you have kind of tight timeclock…but who nows how probate and tax stuff will turn out.

If you’re really comfortable rehabbing this one, I might just redeem it and do full purchase now, then fix up and resell…but resell can be tough in cheap n’hoods.

Lots of stuff to think about,
Joe Brillante