And unmotivated -motivated seller

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And unmotivated -motivated seller

Mike Koprowski
Rental Property Investor · Brimfield, MA · Member since 2017 · 43 posts · 53 votes

Hey BP, 

This is my first question on a forum so give me some slack.

Through my networking I've come across an older gentleman in Massachusetts (MA) who recently lost his wife,  he has stopped paying his mortgage, stoped paying RE taxes and basically wants nothing to do with his house.  Thorough a mutual acquaintance I know that he is planning on packing up and heading south, literally.  He is fully aware of his situation and doesn't care that the bank will foreclose, he just wants to walk away, and he is planning on leaving soon.  I may have only a few days to try to get something going..

I see this as an opportunity for real estate investing/transacting,  but I also see that this an occasion where I can help someone in a bad situation and possibly make something better of it.

Through the mutual acquaintance I know that he has not talked to his bank or a realtor, but he would be willing to talk to me.    

First, how do I handle the initial contact?  I know he is willing to talk, but I know that he really doesn't care about the situation, so I don't want to overwhelm him with creative problem solving, paper work, lawyers and mobile notaries...

Second, what would be the next step?  After reading a TON of the posts on this topic I'm barely starting to sift through the info.  So, if there is anyone familiar with short sale negotiations in the New England area I'd love to hear from you

Thanks in advance to anyone who can help, and if there are any questions I will try to provide what info I have at this time.

Have a great weekend everybody!

-MK

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Minna Reid
Real Estate Broker · Jacksonville FL & Middletown, CT · Member since 2008 · 1k+ posts · 633 votes
8y

You need to figure out whether there is equity in the property or not. No matter how depressed people may be they rarely simply pack up and walk away from tens or hundreds of thousands of dollars.

You should be able to gather a good idea of his equity position by looking at land records. This would help you figure out what your solution would be. 

Then you talk to the guy to determine for yourself whether he is motivated. Maybe he is and just has not thought of a solution for his house issue and is running away. Or maybe he is simply truly unmotivated - in which case this is likely a lost cause.

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  • Dave W.
    Rental Property Investor · Arlington, MA · Member since 2013 · 18 posts · 14 votes
    8y

    Mike - 

    First, not my area of expertise but will offer my armchair quarterbacking until one of the many smarter than me can chime in with actual experience...

    1- do the homework you can and figure out what he owes as of today. If it is a short sale, that’s one thing. if he is underwater but he could just be delinquent a few months and repaying the back mortgage is an option, that is another. Are there liens already at play? (Municipal, tax, etc) — all of this should be public record (masslandrecords) or a call to the town where the house is located in. If it’s a short sale, meaning market sale wouldn’t cover the note AND the guy wants to walk away anyway then it will be extremely tough as it might as well go to foreclosure. If he didn’t want it to go to foreclosure then a short sale and getting some legal help to make it so would be possible and much easier. 

    2- This guy has had a tough lot. You have an opportunity to help him walk away clean and start fresh and avoid the legal hassles and creditors as long as the price you can give him equals what is owed on the mortgage plus outstanding liens/etc. sometimes it’s still not a deal even though it’s a distressed situation.

    3- if the amount of #1 isn’t *substantially*less than the market value of his house. It’s not a deal and just a crappy situation. The house will go to foreclosure and when the bank auctions it, you can show up and it’ll be less than the amount he needed anyway. 

    So.... Assuming it’s a deal worth pursuing - have a lawyer and your funds/funding at the ready and approach him with an offer that gives him the ability to walk away, walk away w/cash, etc — depending on the how much and what you feel is right to do here.

    **If you read this far, I do have a lawyer you can call that works in this space in MA to avoid foreclosures and may be able to guide you and provide a consultation - direct message and I’ll share his info. 

    Good luck / these are delicate situations where you can potentially help a seller AND create opportunity at the same time.

    -Dave

    2Reply
  • Richard Heine
    Investor · Lee's Summit, MO · Member since 2017 · 81 posts · 37 votes
    8y

    I will only answer a small part of this because this might be a good opportunity and I have been through one of these with a seller 2 years ago. You really need to think outside the deal. Does he have kids (heirs), is this guy of sound mind and is there equity in the home.  If the deal is ridiculous good someone might come sniffing around when you are the owner.

    I think your dealing with a common form of grief and depression.

    This is a rescue deal in disguise. The people I dealt with were not in for a chalkboard pitch, you are right. I had them tell me what was going on and what they wanted to do with their life and the house they were already way behind because of medical stuff.  I told them I would come up with a plan and drop by in a day or two.  When I returned I made a short pitch starting with "What if you could,..."  I got a killer price, help them get rid of the car and they ended up with enough equity to move on. But not much. I was there fifteen minutes.

    This is beyond sales 101. Good luck. There are some awesome deal makers on BP so I am sure you will get creative suggestions.

    1Reply
  • Minna Reid
    Real Estate Broker · Jacksonville FL & Middletown, CT · Member since 2008 · 1k+ posts · 633 votes
    8y

    You need to figure out whether there is equity in the property or not. No matter how depressed people may be they rarely simply pack up and walk away from tens or hundreds of thousands of dollars.

    You should be able to gather a good idea of his equity position by looking at land records. This would help you figure out what your solution would be. 

    Then you talk to the guy to determine for yourself whether he is motivated. Maybe he is and just has not thought of a solution for his house issue and is running away. Or maybe he is simply truly unmotivated - in which case this is likely a lost cause.

    3Reply
  • Mike Koprowski
    OP
    Rental Property Investor · Brimfield, MA · Member since 2017 · 43 posts · 53 votes
    8y

    Hey guys, thanks so much for your responses.

    @Dave W.

    I have spent quite a bit of time on the MA registry of deeds hashing things out, looks like all of his previous mortgages have been discharged, there is just one HELOC remaining for $80,000. The property has also gone to Tax Taking for FY 2016 (approx $4,500.) and I know he hasn't paid on FY 2017 and we'll say $9,000 owed in taxes..

    We are looking conservatively at a $250,000+ ARV

    @Richard Heine

    Thats a great story!

    This gentleman does have a daughter, she's actually how we found the deal.  My business partner's cousin (who is a lawyer) is good friends with this mans daughter.

    My business partner actually just got of the phone with him (initial contact) and things look promising.  He has retained a bankruptcy lawyer and his only request/ demand was that we run everything by the lawyer.  He actually said " I really don't care what happens to the house, you can have it if you can make something work".  

    This could be an opportunity to get a great deal but also to help someone in a bad place get some cash out at the end.  It's clear through the conversation that this guy doesn't care, I feel like its our job/ responsibility to care FOR him.

     @Minna Reid

    I totally agree, it seems weird but this guy just wants to pack up and head to New Orleans.

    Its why I titled the post Unmotivated - Motivated.  He fits the criteria of a motivated or distressed sell, but has none of the motivation.

    We are going to have my partner's cousin (the lawyer) reach out to the bankruptcy lawyer and try to get some hard data on the real equity position, thank again for your responses and I look forward to any other input you may have.  Ill try to keep you posted on any progress.

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  • Thomas S.
    Member since 2016 · 13k+ posts · 12k+ votes
    8y

    "I feel like its our job/ responsibility to care FOR him."

    You had me till you made that statement, he has a daughter and he has a lawyer, enough said.

    You need to get your head in the game and take care of business. He should be of no concern to you personally.

    0Reply
  • Mike Koprowski
    OP
    Rental Property Investor · Brimfield, MA · Member since 2017 · 43 posts · 53 votes
    8y
    Man! Thomas S, no one will ever accuse you of tip toeing through the tulips! Look, I agree with you. A daughter and a lawyer should be sufficient council for him and the rest be none of my concern. What I’m not going to do is put myself in a position where anyone can ever accuse me of taking advantage of some poor old man who’s wife just died. We all know reputation is everything and my neck of the woods is made of many small towns where news travels fast. I’m going to make sure I build a solid foundation for my company to grow on. I would argue that this is exactly keeping my head on business. Thanks for the input. I enjoy your “straight to the point” posts. Keep up the good work.
    1Reply
  • Tom GimerBusiness Member
    DMV · Member since 2017 · 3k+ posts · 3k+ votes
    8y

    The BK will be problematic for your plans. Also mortgages and back taxes are just the starting point for the equity analysis.

    Gimer Law516 Reviews
    WebsiteView Page
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  • Thomas S.
    Member since 2016 · 13k+ posts · 12k+ votes
    8y

    If he has a lawyer you will not be taking advantage, my guess is the deal is going to go south.

    A poor old man who's wife just died is what all investors look for. If you want to maintain your reputation all you have to do is make a reasonable offer. Determine equity, decide your required profit margin and make the offer. It will be his, and his lawyers decision, as to what he will accept.

    The only difference between you and me is I would build in a higher profit margin than you will likely choose.

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