Two Part Question: Short Sale/Joint Venture

[Ryan Donohue]

So I believe I have what looks to be a good potential of a short sale:

-Owner is an elderly man(incompetent) in a nursing home and family(his son) was just going to let the house proceed into foreclosure(bank messed up foreclosure ~3 times apparently).

-Son is open and willing to cooperate in short sale. He said I should call the bank and see where in the process the foreclosure is.

-I've been keeping a friend I met at an REIA meeting up to date with my research and he is currently looking into whether its a good deal. He has done short sales before and is willing to teach me the process and partner with me.

How should I go about doing a joint venture(paperwork etc)? Is it too late because I told him about the property already? What questions should I prepare for both the owner(son), and my partner? Has anyone dealt with a situation where the actual owner may be unable to cooperate and a family member had to step in? Ask any questions you need and I'll help you help me! 

Thanks, 

Ryan 

[Matt Musser]

Ryan,

I'm not a lawyer and recommend talking to one. That being said, I would make sure the son has a special power of attorney for the house and the loan. If he doesn't then you will have to deal with the bank. Most bankers will be happy to hear you out assuming you can get a hold of a person that can help you at the bank.

[Wayne Brooks]

Okay, first of all, your "partner" can't really help you much unless you need him for the finances. He can't really influence the short sale process. The bank will require the property to be listed, so you need an experienced short sale agent. The only tricky part is dealing with junior liens and any other attached debts, and the agent will advise you on that. There are also different processes for fannie. freddie/FHA, etc. If it's a reverse mortgage (HECM) the price Will be 95% of an FJA appraisal. The owner, or the son having a POA, will have to cooperate. The first thing the agent will do is get an authorization from the seller to talk to the bank.

[Ryan Donohue]

Originally posted by @Matt Musser:

Ryan,

I'm not a lawyer and recommend talking to one. That being said, I would make sure the son has a special power of attorney for the house and the loan. If he doesn't then you will have to deal with the bank. Most bankers will be happy to hear you out assuming you can get a hold of a person that can help you at the bank.

 Thanks Matt, 

   The funny and wierd part is both the son and father are attorneys! I will definitely look into having that set up though. Thanks for the advice!

-Ryan

[Ryan Donohue]

Originally posted by @Wayne Brooks:

Okay, first of all, your "partner" can't really help you much unless you need him for the finances. He can't really influence the short sale process. The bank will require the property to be listed, so you need an experienced short sale agent. The only tricky part is dealing with junior liens and any other attached debts, and the agent will advise you on that. There are also different processes for fannie. freddie/FHA, etc. If it's a reverse mortgage (HECM) the price Will be 95% of an FJA appraisal. The owner, or the son having a POA, will have to cooperate. The first thing the agent will do is get an authorization from the seller to talk to the bank.

 Thanks @Wayne Brooks! Thats actually the reason I'm looking to partner, as I dont have enough capital to pull the deal on my own.  Could there be more leins and debts not mentioned on the county clerks website? How would I go about finding this on my own if its possible?

-Ryan

[Wayne Brooks]

Assuming your county website works like ours, it should all be there.

[Jeffrey S. Breglio]

Ryan, as always on here, all great information. Let me add to definitely check into the POA. But remember that if the father dies, the POA is meaningless and nothing more can be done. The bank could keep working on the short sale. But you won't be able to actually buy the house with the POA. If you think that's an issue, I'd get the property into a trust with the son as the trustee! Even a simple "land" trust will work!

And, make sure that your JV is in writing and is a good agreement. A bit too much to explain what makes a good JVA into a post. But a good lawyer familiar with real estate investment (not just any lawyer) will be able to do that for you. Partnership are great tools, but very often the most fraught with problems! Get it in writing!

Happy investing!

Jeff

[Ryan Donohue]

Originally posted by @Jeffrey S. Breglio:

Ryan, as always on here, all great information. Let me add to definitely check into the POA. But remember that if the father dies, the POA is meaningless and nothing more can be done. The bank could keep working on the short sale. But you won't be able to actually buy the house with the POA. If you think that's an issue, I'd get the property into a trust with the son as the trustee! Even a simple "land" trust will work!

And, make sure that your JV is in writing and is a good agreement. A bit too much to explain what makes a good JVA into a post. But a good lawyer familiar with real estate investment (not just any lawyer) will be able to do that for you. Partnership are great tools, but very often the most fraught with problems! Get it in writing!

Happy investing!

Jeff

 Awesome, awesome advice Jeff! Thanks so much, I'll keep that all in mind and will be calling our family attorney because I believe he specializes in real estate.  Do you or does anybody else have advice on strategies in contacting a bank from first contact to final signatures?  I know its normal to feel nervous about screwing it up but wondering if theres a few pointers for the mindset I should have going into it.

-Ryan