Cough, cough! Choke! - Posted by Bill Gatten
Posted by Bill Gatten on June 23, 2001 at 17:19:38:
Luis, I agree with the others about this not sounding like much of a motivated seller. There are thee categories of sellers: 1) motivated sellers, 2) not-motivated sellers and 3) opportunists looking for a dummy. I’d suggest trying to avoid #2 and #3 (unless, of course, you?re a dummy).
HOWEVER…what ever do you mean: ?The PACTrust is “too ?extravagant”? Hey!!
Louis, PLEASE UNDERSTAND that the only thing "extravagant about the PT is the way you must be perceiving of it yourself. What’s “extravagant” about suggesting that a seller hold his property in a living trust for his own protection without a transfer of title until you can sell it or refinance it later?
If the deal you posted about had been any good: here is exactly how I’d approach that seller (You tell me how extravagant this presentation is):
Hi Bob, what I’d like to propose is having you stay on the loan for a few years, while I come in and handle 100% of all payments and responsibilities: paying you all of what you’re asking at the end of that time.
“Yeah but I don’t know you. How do I know you’ll perform.”
Well, the way we handle that, is by having you simply hold the property in a trust in your own name. That way you don’t have to put me on title, and you don’t have to show a sale and pay all those capital gains taxes…until such time as I pay off your loan. And that can be as far in the future as you want, and when it happens you can use a 1031 Eschange to further avoid those pesky taxes…
Louis, does this still sound extravagant?
Let me show you extravagant:
?Hi Bob, So you want to sell me your house? No problemo. Here?s all you have to do:
Open an Escrow with a title company that we mutually agree on. Then they order a preliminary title report and title insurance. You then have to have the property appraised at your expense and review and accept my DLFL14 Purchase offer and Receipt for deposit…assuming of course that you’ve listed the property with a licensed agent…who belongs to the local and national Association of Realtors. If not, there may be additional pepr work required. And at that point, I will try to select a mortgage lender out of thousands available, and complete the Form 1003 Mortgage Loan Application. Then I will have to wait for the loan processor to arrange my file and handle the paper work; then I have to wait for Underwriting to approve the loan, based upon verifications of employment, bank accounts and credit references and the ability to pay. Then if my FICO score can cut it, they?ll still have to ascertain my front-end and back end Debt to Income ratios and verify the source of my down payment money (if it is new money, they?ll presume its drug money and may turn me down). Then upon ?preliminary? approval, the lender will likely have to appraise the property again and if it doesn?t appraise high eough they?ll ask for more down payment, and I don?t have any more. Then they?ll try to find some problems and charge you for any refurbishments that have to be done to bring it to maximal market condition (it?s the lender?s only security you know). Then, too, you have the Escrow Instructions, Escrow amendments and the Settlement statement to review and approve. Not to mention all the required transfer documentation and disclosures, and vesting of the property to me via a Warranty deed that must be recorded along with the requisite Change of Ownership notifications…following the approval of my application (if that happens), etc., etc, etc., and so on…?
Now, Louis, do you think that presentation was “extravagant”? Yes…of course because you tried to give the seller waaay to much information. You tried to tell him everything YOU know rather than what he needed to know.
When someone accepts a simple PACTrust offer, everything flows, as it should. There is no reason to try to give someone a college course on trusts in order to acquire a property. When the paperwork becomes necessary, it just appears with a line to sign on.
Now?go get ?em.