If they don't have equity on their property or are upside down, what can you do?

Question

Let's say one house is only upside down like 20k, and another house is upside down 200k. I know you can probably do different things with each (say the value of each is 250k)

Is there anything you could do with a house upside down 200k other than short sale?

Bill Gulley · Answer

Another long term installment deal? If I were to ask you a quetion would I get a truthful answer? How many installment deals, L/O, CFD, Sub-2 or variation thereof have you done that were more than five years long and ultimately closed?
 
Having done and serviced over a thousand in my days, I'm pretty sure I know the answer. I also imagine that many who advocate such deals are in and out leaving the owner and buyer on thier own. What the gurus don't tell you is that you are liable for your acts in the matter as long as that contract is in force, assigning and walking away doesn't mean you can wash your hands of the deal!

On a property that is less than 10% underwater, there may be hope in 5 years, the other is out of the question, IMO.

The longer the deal the better the chance of it blowing up, if it's too short, it won't fly either. There are "life events" that can wreck an installment deal, divorce, death, incapacitation, loss of job, bankruptcy, law suits by others, tax problems and the list goes on, I've even had buyers and sellers going to jail. The gurus don't tell you how to address these issues.

If a borrower is underwater and gets behind, they have better options with modifications and short sales. Many running around are probably not even aware that there are federal protection laws in place restricting who can even approach an owner in foreclosure or underwater! I suggest unless you're a seasoned type with experience and compliant with applicable laws, that investors stay away from those with deeply underwater properties, I know there are those that may think they can really help, but it's people like those that such laws were passed. There are plenty more deals out there, IMO.

Jackeline Petrucci · Answer

Short sale is by far the best option.  The best deals I have found had been short sales.  You don't need to negotiate them yourself, there are many good companies that will do it for you for a fee.  If they get you the price you want then you pay them otherwise you don't.

Brian Gibbons · Answer

I think seller financing in TX is an important topic.

See an attorney's AITD point of view in TX,
http://www.lonestarlandlaw.com/Wraparound.html

Bill Gulley · Answer

Hey Laurence Bealer here's your chance to shine about your niche... :)

Bill Gulley · Answer

Now, I realize that some believe I think I know everyting, but really, that's thier perception, not mine. Just an example, I have not purchased a short sale, came close to getting one going for someone, but we didn't do it. There are new rules for these, I think I've pick up most of it here on BP! While I have bought from sellers and got some knocked off in the old days, but not really a short sale as we know them today! :)

Does forgetting stuff count as not knowing, but then what if I remember?

And yes, I'm interested in the niche you're describing, tell me the differences...  :)

Laurence Bealer · Answer

Of course the existing mortgage is in place regardless but can we agree that there is a distinction between buying and selling sub-2 and using an actual AITD? 
Again, know one ever knows all there is to know about real estate. 
Are you truly interested in this niche Bill or just being facetious?

Bill Gulley · Answer

Okay, the property is underwater, you take a wrap with your AITD (All inclusive Trust Deed) wraping the underlying mortgage that is higher than the property is worth and if you're a great guy, toss in some more for the seller. Then you say you'll sell it. Really, how?

On a long term seller financed deal again?

Why not just sell it now?

BTW, the warp is taking it sub-2 the existing lien, either way, the sller is still on the hook. Either could have the same provisions and a special warranty deed is granted by the seller. :)

Tevis Verrett · Answer

Thanks to Tommy R for an engaging topic.  A thanks to all the heavy hitters whom have weighed in, especially Bill Gulley!

Directly in Brian Gibbons' wheelhouse is this upside down scenario.

So Brian, buhring it!

Blessed Easter all,

Tevis

Laurence Bealer · Answer

Well, he is saying take it over sub-2, which is an option but I don't know if I would do a sub-2 unless I felt really good about the sellers. I would lean more towards an AITD to buy and sell.

J Scott · Answer

Yup, that's basically what James Martin suggests above...

If they don't have equity on their property or are upside down, what can you do?

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