Wholesale Contract on Short Sale Deal

[David Braut]

Investment Info:

Single-family residence wholesale investment in Des Moines.

Purchase price: $285,000
Cash invested: $500
Sale price: $332,500

This was a short sale that I negotiated with the bank myself. They agreed to 205k as a payoff payable within 14 days. There was a private party lien on the property that would not agree to a discount so I agreed to pay them off at closing. I advertised the property with signs and on craigslist and there was quite a buzz. The house was a fixer and needed a lot of work but was large and had good bones. I wholesaled my contract for an assignment fee of $47,500. The buyer wanted to close at a real estate attorneys office of his choice. I agreed. The attorney told me it was the largest assignment fee he had personally seen and he congratulated me!

What made you interested in investing in this type of deal?

I wanted to learn more about short sales and liked the excitement, negotiating, and the good profit potential.

How did you find this deal and how did you negotiate it?

I found it by going through the notice of default list from the county. I called the owner and asked him if he would sell it to me as a short sale if the bank agreed. I negotiated with the bank using comps and since the property was in poor condition, the bpo came in low. The loss mitigator called me back with the final number they were willing to accept and I said ok and then I got to work marketing my fixer deal.

How did you finance this deal?

I wholesaled the contract and I wrote a check for the earnest money out of my personal bank account.

How did you add value to the deal?

I cleaned trash up from the yard and hauled a few pickup truckloads away. Other than that I marketed it properly and agressively. Signs, flyers, craigslist, newspaper ad etc. I helped the homeowner avoid a foreclosure and also was able to get the private lienholder paid off in full. The private lienholder was the in-laws of the homeowner. They had loaned the original down-payment to the owner so it felt good to be able to get that back to them and I believe it helped heal their relationship

What was the outcome?

I made $47,500 in about 3 weeks from the signing of the p and s to close.

Lessons learned? Challenges?

I learned that a loss mitigator will sometimes tell you their payoff amount. I learned that investing was better than being an agent. I learned that there are still foreclosures even in hot markets and that I didn't have to invest a large amount of my own money to make a handsome profit.

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

No.