How to be the investor if they call you to list the short sale?

Question

I have received a call to list a short sale for sale. I am an agent, but this home could be a great investment opportunity. 
How can I make this work so I can buy it?

1 problem is that I would need an extra 150k to buy it. How can I get this extra money? Can't go to a bank. Ideas or contacts? It could be resold within 2 months for a 30k profit without doing any improvements.

I thought about having another agent list it as the bank makes you sign an affidavit stating you are not buying the home or are related to the seller, but the problem is that I don't trust anyone else for negotiations and follow up with the banks for a short sale,.. it is just a lot of work to do and most agents won't do it. And I can't be the buyer and call the bank as negotiator, can I?

Ideas?

Paul B. · Answer

I'm confused. Who sets the price if you take the listing? Your client, or you?

If it's you, why aren't you listing it for what you think it will sell for? For what it's worth?

Seems to me that you really can't represent the best interest of your potential client in this case, can you?

Maryann L. · Answer

Each lender is different.  Wells Fargo actually has a NO FLIP clause in it's paperwork, although, I've literally just crossed it out and told them per my contract we disclosed we were reselling for profit.

The C buyer's lender just needs to be ok with the fact there was a quick purchase and resale.  That is one of the things that is most problematic for most flippers.

FHA wouldn't necessarily have an issue if you held 30 days but the clock starts ticking WHEN you take title, not before.  So assuming they can get an appraisal, inspection etc back within four weeks and write title, you should be fine.

So here's what to expect.

$30,000 GROSS profit
- holding time 4-5 points $15000
- Commission (6%) based on 3 from resale $9000-$3600 = $5400
- electric, gas, water for one month $300-500
- closing costs $1000-$1500
- Taxes ???  $800

You're looking at around $7000 profit.

This is all variable and not taking into consideration either lender may ask you to come to closing with $$

J M. · Answer

Thanks again. Yes, having someone else list it may be the only way. What kind of issues may I encounter with a buyer's lender after 30 days of holding? you mean the FHA investor's 90 day seasoning..not sure ..

Maryann L. · Answer

WF definitely has an arms length transaction you must sign.  Not sure you could list it and then buy.  You may want to team up with another agent that you trust to list it.  You could TRY to disclose up front that you want to buy it, but I suspect they will not allow.

If you can't do a double closing the only other option would be extended transactional funding or hard money.  Extended transactional funding would cost you a lot of points and so would hard money and most hard money lenders want you to come to the table with some skin in the game so it's unlikely they will fund you if you don't have something to put down.

Even if you hold title for 30 days you MAY still have issues with seasoning so if you are still making a profit after the 30 days you'll need to make SURE the C buyer's lender can close.

J M. · Answer

Thanks for your reply. This is Wells fargo and Us bank as a second. I am not sure if they have an arms length nor a seasoning requirement, but I am assuming they do. Also, just the thought of the double closing and having to explain to a C buyer what is going on, exhausts me. So I would like to just purchase it and turn around and sell. Can you get private money for that?

Deuce, no in that case I won't represent the best interest of my potential client. I will disclose to him that I will list the property and that I may buy it and make an offer to the bank as an investor, if he has issues with this I will just list it as an agent for what it should be worth.

Maryann L. · Answer

JM you could buy the home depending on the investor guidelines.  Not every investor makes you sign an arms length transaction.  The best thing to do is DISCLOSE to the lender that you are an agent that wants to buy the property.  They MAY have an issue with you making a commission but maybe not.  You could do a double close and do a straight short sale flip.  There are plenty of transactional lenders here that will give you an opportunity to borrow their money for a couple points.  It's well worth it if you can get it double closed.  You'll need to make sure your buyer's lender doesn't have seasoning requirements or you'll have issues.

As far as trusting a negotiator you have two choices...either you do it or you hire a 3rd party.  There are also negotiators on this site that will charge a fee for the negotiation.

Good luck

How to be the investor if they call you to list the short sale?

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