All Forum Posts by: Denice S.

In my market, homes with foundation issues do not keep pace with market value trends.  26 piers, filled cracks in the foundation and sloping living room walls would only attract investors and would sell at a decent discount. Conventional buyers would be running.

Be sure to comp this house with other homes that have sold after having extensive foundation work.

If 159,00 is absulutely no problem then your idea to wholesale, in my opinion, is safest.  But my real vote is for you to walk away... Because once foundation work begins...too many cans of worms and your numbers are way too tight.

Your residential mortgages will have a due on sale clause. If title passes from the original borrower to another person or entity, the bank could call for the balance of the loan.  

With interest rates on the rise, it’s a good bet that banks will call due if they can put their money elsewhere for a better return. 

If you have the funds to payoff the balances it’s not as stressful.

Wow, these approaches wouldn’t fly in NY. 

Suppose your sister does get an uninformed buyer to agree to purchase a property that has a first position mortgage lien against it.  What happens to the buyer if your sister stops paying her loan? What if her lender forecloses? What if your sister gets her assets frozen or she’s sued? Where does that leave the buyer?

I hold the mortgage note on a property that I owned free/clear.  The buyer sends escrow payments for taxes, sewer and insurance.  I have to keep a separate account to pay those expenses and a yearly statement accounting for escrow and estimated future payments.

It’s not exactly passive. 

I would bet that once you get an attorney involved they will lose interest when they learn the property doesn’t have clear title. 

If the buyers down payment can satisfy the mortgage balance that’s a different story.  Maybe then, look into loan servicing companies. 

This brings me back to my 3rd rental acquisition back in 2009. A  $10,000 sewer backup/collapse right after my tenants moved in. Same scenario, no insurance coverage for the install of a new line. 

Money was tight back then so I used a plumbing company that offered 12 months same as cash and paid a few hundred every month. 

When the year was almost up, I transferred the balance to a competing credit card for another 18 months - and then when that was up, I did it one more time.

Eventually I had enough incoming rent to pay it off.

Ask every contractor for 12 months same as cash...someone is offering this. 

If I’ve read correctly, this is your first deal and your plan is to flip this property within 1 week of ownership and you’re looking for a way to not take on the occupant?

If that is the case, and you really are trying to mitigate risk then there must be something you can do to postpone closing and make the seller deal with the tenant.  How about the property not being broom clean, or not in substantially the same condition, or the presence of an unauthorized occupant.  Anything?  I simply would not go to the closing table.  

However, it sounds like you are either legally bound to close or determined to close and hoping there is a quick way to make someone leave so you can execute your plan.  

So, yes, try cash for keys but call an attorney to see if you need anything in writing.  Also, you are within your rights to ask for a credit at closing for the unexpected costs of having to evict or buy off an occupant. 

If the occupants don’t respond to cash for keys then just do your best to look on the bright side.... This 1st deal has the potential to teach you about tenants rights, squatters rights, courtroom hearings, judges, cash for keys, cost of evictions, mitigating risk, going over budget, going over timeline, and maybe you’ll become a landlord in the process.  Most investors have to learn these lessons little by little as they grow. 

Best of luck, keep us posted.

A little more information is needed...

Is the closing contingent upon tenant vacancy? Do you get a final walk thru before closing Tuesday? If so, use your final walk thru to delay the closing until the seller can provide you with a vacant property. 

I would never take possession of any occupied property where vacancy was a contingency. 

Tread carefully.  Are these newer tenants or are you very familiar with their tendencies?  If they are newer, less than 1 year, you will be setting the tone for all future contributions.  For instance: your leaking toilet ruined their rug,  your fridge stopped working and their food spoiled.  Your lock malfunctioned and someone broke in.  etc..

If they are well established, great tenants then possibly a small contribution (not half) but make them go through a process. Create a form, make them attach the bill and previous bills (last year's bill etc). Then tell them to submit it for review.

But either way, do your best to explain facts.  Fact is Electric bills are twice as high now that the hotter months are upon us.  That is 100% to be expected - double the electric when AC is used, for me sometimes triple.

Good luck.

John,

The WNY spring market is here and it's the best time to list with a Realtor in the MLS. You don't mention where your mom's home is located, but you should know that a lot of neighborhoods are selling for 10-30% or more above asking. Inventory is very low and open houses are having record turnout. Like over 100 buyers through in 2 hours. I recommend at least getting an estimate as they are free.

There is no set % commission across the board but you’ll see a lot of 5,6,7 etc and, with that,  a range of services. 

Either way you will need a real estate attorney. Not by law for Fsbo but numerous contracts and steps may be overwhelming.  They charge apx. 500 at closing and the Realtor you choose will be able to give you a list of recommended attorneys who are proficient in conducting business via email.  It’s very common now to have an entire transaction facilitated electronically by your Realtor (that’s part of the service). 

Aside from sales charge and attorney fee,  seller’s closing costs in this area are: title search (800) survey (400) transfer deed ($9 per $1,000 of sale or $4 per 1,000 depending on County/exemption status). Being that your mom is 88 she likely would be at the $4 range.  Filing fees (50).   Credits back to you would be prorated taxes and insurance, as these are prepaid here.  These are just estimates but gives you an idea.  

Selling to a neighbor for less money  isn’t necessarily easier when you’re  an out of town seller.  Unless they agree to do all the legwork and maybe even pick up the closing costs. If you decide to go this route, maybe just sell via quitclaim deed and avoid all the contingencies. 

Overall, if highest proceeds is the goal and having the sale facilitated is important, then a Realtor and the MLS are the way to go.

Your realtor will give you an estimate of your net proceeds so you can do a side-by-side net profit comparison with your neighbors offer.

City of buffalo assessor’s website has the tax rate posted in PDF - Look for 2017-2018 tax rate link.

Multiply your projected assessed value by the listed rate of each tax category... city, school, sewer etc and add the totals.

You will use the non-homestead rates. 

This has happened to me twice, exactly as you describe (winterize, lockbox, note).  In both cases, they were bank ordered.

These lenders were so far behind on their foreclosures, they had no idea that the properties were sold at a tax auction-I bought them.

In one case, the contractor was horrible and the bank reimbursed me for damages. Take photos of everything.