Posted by Ben (OH) on November 22, 2000 at 05:39:47:
One atty I had talked to didn’t like the idea of getting the deed w/o a purchase agreement. Thought there might be an element of fraud if I didn’t complete the sale. Any thoughts on this?
Need to create wrap around by TOMORROW!!! - Posted by Lisa Jones
Posted by Lisa Jones on October 31, 2000 at 23:39:22:
I really need someone to help me out.
My girlfriend called me and told me that this guy has to sell his property by tomorrow. He wants to come into the office and sign everything over. I am very new to this, but I think I need to get him to sign the property over to me and deposit that deed into a trust accout with me as the beneficiary. I think at that point I would then create a sandwich lease----The property has a first mortgage of about 78,000. The selling price was about 83K. Appraisals are coming in around $85-90K. I figure I could put it back on the market at FMV for 88K and keep the spread.
Please tell me if this is the right strategy. What paperwork do I need and where in heaven’s name do I get it.
I can’t afford to hire an attorney at this point, as the money I have to give him, is most of my savings. I am counting on collecting the my outlay from the new buyers created from the sandwich lease.
Also, what do I do about fire insurance etc.? How can I make sure my interest (trust fund) is protected or is this a concern?
Re: Need to create wrap around by TOMORROW!!! - Posted by JohnBoy
Posted by JohnBoy on November 01, 2000 at 15:09:40:
First of all, forget what appraisals are coming in at. Apprasials don’t mean squat! What you NEED is to check recent COMPS on compareable homes in that neighborhood and verify what they have actually SOLD for within the past 6 months. DO NOT have any realtor involved with this home pull the comps for you. Realtors can hand pick the comps they only want you to see and leave out any lower comps. Check with a local title company and see if they can give you comps or check with the county courthouse or check with an appraisor or get them from another realtor’s office not involved with this sale. But what ever you do, VERIFY the comps, NOT what someone says appraisals are coming in at.
WHY are you giving this guy any money at all? If he HAS to sell this by tomorrow then he doesn’t have much of a choice. YOU set YOUR price and terms or YOU DON’T BUY! It’s that simple!
If the selling price is $83k, WHERE’S THE DEAL??? If your plan is to put it back on the market for retail you will end up LOSING money on this. How long do you think it will take to find a retail buyer for this? Figure up to 6 months that you will have to cover the mortgage payments on this until you find a buyer and the sale closes. Then figure in 6% for a realtor commission if you retail this on the market.
If the property is even listed at $90k, figure a counter offer from any potential retail buyer. That will put you at about $85k - $87k for an actual selling price. At $87k, the realtor commission will be $5,220.00. Up to another $6k in monthly payments that you may get stuck with until it sells. That eats up $11,220.00 right there alone. That leaves you with $75,780.00. Then deduct any repair costs you made need to spend on fixing anything to get retail for the property. Then deduct all your closing costs. By now you’re down to around $70k coming to you at closing. But you paid $83k! You will need to bring $13k of your own money to the closing just to close the sale on this. You end up LOSING $13k!
The way to do this is to just agree to take over the sellers loan “subject to” to BAIL HIM OUT! This is HIS problem, don’t make it become your problem!
You say your girlfriend called you on this and the guy is coming into the office to sign everything over. I assume the office is meaning the realtor’s office and your girlfriend must be the agent, is that correct? If their is an agent involved then that’s where any money in this deal left over from the mortgage balance is going, to PAY THE REALTOR’S COMMISSION! The seller is getting NOTHING!
Have the realtor agree to carry the commission by taking a promissory note and make payments on the commission over a couple of years. If they won’t do that then let them buy it!
If you take over the mortgage “subject to”, then their is no sandwich involved with this deal. A sandwich deal is when you LEASE OPTION the property from the seller and then you lease option the property to someone else collecting a spread between the difference of your cost involved from what your tenant/buyer pays you.
Since this would be you taking over subject to, you become the legal owner. It’s YOUR property from that point on. You would no longer be involved as a middle person. You are the OWNER that would be either selling or lease optioning the property to someone else. The original seller is out of the picture as far as legal ownership of the property is concerned.
The seller will remain on the original loan. You will be responsible to the seller for making those payments and paying off the loan.
You have the seller deed the property into a land trust naming HIMSELF as the beneficiary. THEN you have the seller ASSIGN his beneficial interest of the trust over to you. This way if the bank ever wanted to see the actual trust agreement it will show the seller is the beneficiary. The assignment is kept silent and doesn’t get recorded. So the only way the lender can find out if ownership has ever transfered is if you or the seller TELL THEM ABOUT IT! Otherwise they will never know.
Once have taken over the property then you offer it on a lease option or sell it on a contract for deed. This will allow you to find a buyer quicker because you’re offering TERMS! Terms sell FAST!
Then you get your option consideration or down payment if selling on contract for deed and make a monthly profit on the spread between your tenant/buyer’s or buyer’s payment to you vs. your mortgage payment from assuming the original loan subject to. No real estate commission to be paid, usually a buyer is found within 60 days vs. up to 6 months trying to sell conventional, no closing costs until option is exercised or contract is paid off when the buyer refinances (which you can make the buyer responsible to pay all closing costs in your agreement) and you end up making a decent profit on the deal.
You have the seller name you as additional insured and have him sign over power of attorney to you so you can cash any checks paid out by the insurance company.
Re: Need to create wrap around by TOMORROW!!! - Posted by Angel Gutierrez
Posted by Angel Gutierrez on November 01, 2000 at 20:13:39:
I LOVE these “emergency” deals!
First things first… Don’t make this more complicated than it needs to be. Before taking the “deed” to this guys house, make sure you have “insurable” title. That’s right! Insurable! Your freinds at the title company can and will help with this. It doesn’t matter where the guy goes, he can always deed it to you wherever he is…unless he’s gonna “off” himself tomorrow. Also…go “LOOK” at the house and see what you’re getting/buying. If it’s junk, move on! Forget it! If it’s alright, and you have “insurable” title, then get the deed. Oh! It doesn’t have an assumable loan? (Your answer should be no) I say - big deal!
I’m gonna scare a few people or anybody who reads this by saying…just take over and keep making the payments(and don’t buy unless they and all the taxes and insurance are up to date) and believe me when I say…NO ONE CARES if there is an ownership transfer… unless you stop making payments. Then and ONLY then does the ownership issue come up because of the foreclosure process the bank has to go through (title check, taxes so on and so on) GET IT?
Keep making the payments and do a lease option(run the ads) … If you don’t know how yet, START READING NOW!
You’ll be able to make an easy 15 to 18 grand on this one alone! …I am living proof that this can be done! All 16 properties I have I’ve bought this way and believe me when I say…NOT ONE bank has ever sent any check of mine back. Trust me when I say…Look at things for what they REALLY are. It’s just a house, you’d do the same if you were buying a car. Good luck!
Let me know what happens.
Re: Need to create wrap around by TOMORROW!!! - Posted by JohnBoy
Posted by JohnBoy on November 01, 2000 at 20:40:22:
There is NO problem with getting the deed NOW! ALWAYS, ALWAYS, ALWAYS, get the DEED FIRST if possible. You can check title later, you might not be able to get the seller to sign the deed over later! IF, title doesn’t check out, then DON’T RECORD THE DEED! You always get the deed, check title afterwards, if everything checks out then record the deed, IF it doesn’t check out, then just tear the deed up and pitch it in the trash! End of deal!
Make sure you get it notarized also so you can record it later after verifying everything. Also, DON’T give the seller any money until after you verified everything first, assuming the deal will require paying the seller something out of it!