Garage Sale Deal - What?? Please analyze....

[Jerry Sather]

I was driving a neighborhood (after checking out a listing I was interested in) looking for homes with deferred maintenance and happened across a garage/yard sale sign. My gut told me to stop and see why they were having the sale.

My gut was right (and hungry). I struck up a conversation with the woman after I confirmed she was the owner. I hit it off with her dog, so of course I hit it off with her.

I confirmed she is in preforeclosure with a sale date about 5 weeks away. (FYI, in Minnesota there is a 6 month redemption period after the sheriff's sale) She told me the sale had been delayed in the past and she though she agreed to be out of the property within 5 weeks of the sheriff's sale.

In the end I found out that she has a huge stack of investor solicitation letters offering to buy her house but she had not interest in calling anyone or dealing with a Realtor to have it listed. She has no interest in trying to salvage her credit and just wants to stay there as long as she possibly can.

I let her know that I may be able to find an option for her to get out of her house with a small amount of cash in her pocket instead of just walking out empty handed. She thought that would be great and wants me to help her if I can.

I confimed:

She owes $205K to CitiMortgage

ARV = $170k-$180K (totally remodeled home right next door just sold for $180k)

Repairs = $25k-$30k

I need to buy it for about $100k and give her a couple grand walking money.

So how would you approach this situation?

Is there any possibility to do a "short payoff" with the bank?

She has started the modification process several times over the last 2.5yrs and apparently the bank can't get anything figured out and keeps losing track of the documents she sends in.

My problem the way I see it is time (5 weeks to sale date) and she will not list it as a short sale with a Realtor. From my understanding the banks only want to go through the full short sale process of having it MLS listed etc..

Am I missing an easy solution? I have no short sale experience, forgive me.

Jerry