Getting money to the homeowners after SS

[Lafi S.]

I came across this agreement that basically states you, the buyer, agrees to purchase from the seller their personal property. I thought that this might be a good way for homeowners to make some money from investors when doing a short sale flip.

Has anybody ever heard of this? Does the bank have to know if this agreement has been made? Is it even legal? I would love to hear your thoughts on this, because if it is legal I think it might be a great way to motivate some homeowners a little more. An extra 1 to 2 grand in their pocket can go a long way for us investors and certainly help us close more deals.

[Steve Babiak]

An agreement of sale for personal property is completely legal. I have used notarized agreements of sale for personal property for buying houses where the seller leaves all the stuff behind (CYA tactic, so that I can toss into the dumpster what is now my property). But when you have that agreement from the lender to not benefit the seller in any way, you end up circumventing / violating that agreement with the lender.

Some of the gurus used to pitch this idea, to buy somebody's stuff for more than it's worth along with their short sale - don't even think about trying that. If you do insist on pursuing doing this, I suggest you find out what the FMV would be for that used item (Craigslist or ebay might have pricing), and don't exceed that amount.

And you might want to actually arange for others to do this for you - this becomes a bit of a gray area, as to whether you benefited the seller by this type of arrangement.