Need help - creative structuring for a probate deal...

[Nicole (Dunlap) Pendergrass]

Need help on a probate lead that called from our direct mail campaign:

The property was in probate about a year - the will was contested so the executors (2 brothers) just got full posession of the property in March. There's a reverse mortgage of $160k and the lender just started foreclosure proceedings since the loan provider has already given about a year grace period - the loan was technically due last year when the owner passed. It's a 2 family and one brother lives in a unit and the step-mother lives in the other unit (step mother is the one who contested the will). The brothers are resistant to accepting our cash offer of $220k 1)bc their parents owned the house for 30+ years and they dont want to "give" it away and 2) they have to split the proceeds with the step-mother 3) the brother needs some more time to move out - find another place, etc.
The Property is worth about $400k.

Just to help them come up with other options, I discussed them doing a re-fi to pay off the reverse mortgage and that would stop the foreclosure plus give them time for the brother to move and to sell for a closer to market price. They explored this option but apparently the step mom has to approve a new mortgage/refi bc she's named as a permanant resident/tenant on the will.

WHEW! Got all that???

Anyone out there have ideas other than our cash offer or a re-fi that could help them??? We discussed owner financing options and I think he will be open to that if it gets him a higher price... Any ideas on how to structure an owner financing option?

I was thinking pay enough cash to pay off the reverse mortgage and the balance of the purchase price have the owner hold the note.... but how much should I offer in this scenario???

Thanks for any input and help!

[Brian P.]

Nicole

The stepmother is the key to this thing as far as I can tell. You say she was declared a permanent tenant in the will, is she living there free? It doesn't sound like she got an actual deeded life estate so I don't know your states laws but if it goes to foreclosure her permanent tenant status can be kissed good by in the states I do business. But she is probably thinking she is set for life and can sit tight.

So I would just present them with the facts, it is going to foreclosure unless they pay up by getting a loan, which I think they won't qualify for. They can get some bucks now and avoid what is to come and they all, I include the step mother (sell her tenant status to you), can take your offer now, or they can go list it with a Realtor and try to ge more money but they better hope there is a buyer out there willing to put up with the situation and can close before the foreclosure and is willing to pay a higher price which will include a brokers commission. And if the step mothers unit is a no income unit with no contributions by her the property value just took a very big nose dive.

Tell them I am in a position to do it now and solve many problems for you, but I will need to forget this deal and move on to other people that want and need my help and are willing to take action now to solve their problems. You guys can get something now or take a chance at losing it all at the foreclosure. My offer is still good for one week but then I will have to go help someone else. I'm in a business and if I don't do business and make some profit I will be out of business. I can't stay in business just waiting for business, I need to be doing business so I need you guys to act now and to quit wishing for more money then is likely to come at this time. I'll call you in a week and see if you want to list with a Realtor and pray, or sell to me, or just let the foreclosure sale decide it all. Of course if it is a decent property the auction price overages may provide more money to them then they are going to get from you but that is your secret.

Frankly I would just prefer to buy the loan and let the foreclosure continue if I could. Or joint venture and split the net profits with them on some worth while split to you (probably the best shot). Or wait for the auction and buy it then if you can get it at the right price. Let us know what happens, we learn from the deals that are not the run of the mill situations.