All Forum Posts by: Eric Foster

Hello fellow rehabbers,

If you have been rehabbing for a while, I am sure you have ran into a situation like this one...

You buy a house and the seller says he will “clean things up” and then a few days before closing he says that there are “some things he couldn’t quite get to”… and that they “may need to leave some items behind”...

Our record to date is 12,000 pounds of “Stuff” (being polite) being left behind…

Check out this You Tube video… They left a “little” stuff that they “couldn’t quite get to”…

http://buildingmyrealestateempire.com/2007/09/20/rehab-project-seller-left-these-items-behind/

Have you ever broken my record of 12,000 pounds of “stuff”?

Thanks for your input Jason!

Jeff,

Welcome to the group... it is nice to have you here!

And, good to hear of your continued interest in investing.

Go get em!

Thanks for your reply... I will check out the other two you mentioned.

Take care!

Yes, when I am dealing with a homeowner, I make sure to explain the benefit they would have by selling to me and to not receive a 1099. I can make the difference of me or someone else getting the deal! Many investors do not discuss this, or simply do not know about it.

Also, when working with me, the seller is assured they will not get a 1099 or a judgment against them for a deficiency balance… since I make sure the short sale agreements say so.

Yes, working with a Realtor absolutely gives the transaction more credibility in my opinion. Banks don’t like to sell to “Investors’ in general, because they feel they are leaving money on the table. When a Realtor is involved, it seems more like a “home owner to home owner sale”, rather than a home owner sale to an “investor”.

A Realtors commission is based on the sales price, just like on any other regular sale… And, the lender will pay real estate commissions to sell as that is a “normal” practice. They do however sometimes ask the Realtor to take a reduced commission. Not always, but sometimes.

Take care!

I replied to your other post too... It answers these questions...

Here is the post... (Hope this works...)

http://forums.biggerpockets.com/viewtopic.php?t=15119&highlight=

I replied to your other post... so that a look at that too.

But here are some answers to these questions…

Why would a seller do it (participate in a short sale) and get no cash at closing? Well… it depends on what state you are in, and what type of foreclosure it is... i.e. judicial or non- judicial foreclosure.

In some instances after the lender forecloses, they can still come back after them for a deficiency judgment and try to collect the amounts that they lost. It does not happen too often, but it can happen under the right circumstances. If it did, the old owner could have all the normal collection activities take place… Garnish wages and levy bank accounts and other assets, and further destroy their credit etc.

Also, when a lender takes a hit and takes less, like a short sale, or less due to the results of a foreclosure, the lender can and generally will send a 1099 form to the previous homeowner.

In many cases, if the bank lost say... $50,000 on the loan, the home owner could (and probably will) get a 1099 for $50k and have to pay income tax on that money.

Also, Im not an accountant… but if they got a $50,000 dollar 1099, it sounds like to me they would owe close to $20k in taxes to the IRS…

So… by saving money is how they get money.

There are exceptions and many variables, but these are the basics...

Best of luck...

Creative...

Hey msedwick,

I will help answer your questions above… probably not what you want to hear though…

1) That is true… I have never seen a bank let the seller get money since the bank is taking less than what they are owed. In addition, they don’t want to see a 3rd party (investor) get money either. They may be exception to this, but I have not seen it.

2) Creative ways?... Well there are many “Creative” ways… however many of them that people do are… borderline illegal, or flat out illegal. You need to be careful with this! Fraud is a big problem, and lenders know this and check things out that seem a bit “weird”. There are RESPA and TIL (Federal) laws along with local State laws that come into play on almost EVERY real estate transaction. Be careful; know what you are doing, and get advice from an attorney.

3) That is possible… but probably not very likely. Especially if you are doing a sub-to, short sale, and trying to have left over equity…. Tough combination to get through, especially trying to do it legally. Again… I would suggest that these are attorney questions…

There are people doing just about everything you can think of…. However many of them are a bit sketchy…

I like to do things correctly… I like to sleep at night!

Take care!

Thanks Galvin....

That is a good idea... I will give it a shot!

Hey Michael,

Great tips and ideas... I never thought it through that far before. I will do that in the future...

Take care!