Need help with first deal

[Jordan Spohn]

Today, my partner and I met up with a desperate seller who called about one of our "WE BUY HOMES" ads for wholesaling.....The situation did NOT turn out the way we thought it would. She did not want us to come to the property because she was embarrassed of the mess she had and she wanted to clean up before we looked at the house. So we met up at a local McDonalds to get some info.

Turns out she still owed 73000 on a mortgage lien and 3200 in back taxes. The entire roof needs to be replaced which she had an estimate of 8000 on and the basement flooded.

Her mortgage has been transferred back and forth between two companies and now either of them will accept mortgage payments for her because they both claim they dont have her mortgage. she was told (cant remember by who, I think it was a judge or something) that she should wait to take any action until the state notifies her to do so.

Heres the real catch, she doesnt want to sell her home. Instead she wants us to buy the property to get rid of the mortgage and back taxes and then sell it back to her. My partner and I mentioned the possibility of a lease option, but thats not what she wants. She does not want to lease at all. She made it sound like she basically wants to swing the money around and when we buy it to get rid of the mortgage and back taxes she would buy it back with the same money. Dont know if thats possible or not

We scheduled to meet up with her tomorrow to look at the place because we told her we really cant do anything unless we see the inside.

Not only that, but she feels like shes really short on time and needs us to come up with a decision by this weekend. Which there is no way we can do that.

We have NO IDEA where to begin with this one. All we wanted to do was get a quick wholesale and its become a much bigger problem than that. And we know that this business is about creating win/win situations, so we dont wanna be so quick to give up on her. What should we do?

[Jon Holdman]

MOVE ON TO THE NEXT DEAL! You don't even want to get involved with this one. She "she wants us to buy the property to get rid of the mortgage and back taxes and then sell it back to her". No chance. She wants you to defraud the lender by buying on a short sale, then selling it back to her at a lower price. If you get the lender to agree to a short sale, you will sign a statement saying the current owner will not receive any benefit. Buying at a discounted price would be a benefit. Even leasing it to her would be a benefit.

A purchase/sell back arrangement where you buy and then lease/option it to her has even more issues. If she stops paying (something she's already shown she would do) and you try to evict, the judge may decide she actually has an equitable interest or even ownership of the house. You may think you bought it and then rented it to her with an option to purchase. The judge may decide you made a loan to her (the amount you paid), are charging her payments (the amount of the rent payments) and have a balloon payments coming (the repurchase amount in the option.)

Now, its not a bad idea to take a look inside. This seems destined for the auction block. Having seen inside you have more knowledge when it does go to auction.