All Forum Posts by: Mitch Freed

Are you 100% sure that they only owe 170k? If the remarks say it is a potential short sale and the property is listed at 300k...then they owe close to that amount.

Chances are they re-financed after they purchased the house in 1999.

You might try to find out exactly how much they owe...the agent won't be a great resource because they won't disclose this...but it is all public record so you could find out by either checking county records for any trust deeds or mortgages...or have somebody from a title company check for you.

I get a weekly email from title companies here in Oregon...they compile NOD's from three major counties. If I need other counties I can request them. The emails come with excel file attachments which I can filter as needed.

Title companies usually have marketing representatives who will put you on their email list...so each week you will be automatically sent the list.

Regarding the opening bid...doesn't the NOD state the balance of the loan in default at the time of publication?...the opening bid is usually pretty close to the balance at that time (plus some fees and more arrears). However some lenders are reducing opening bids to be lower than the principal balance...and you might not find that out until it is posted.

The other way is to check county records for any deeds of trust...a title company may be able to help you out as well. Here you will only see the original balance of the loan.

Ed,

Are you a real estate investor? If so, find how how much cash she wants, if any, and offer to buy the house!

I imagine if she is elderly then she probably isn't going to qualify for any loan to re-fi the house...but you could refer her to a mortgage broker just to be sure.

If you aren't a real estate agent then you have no fiduciary responsibility (you can refer her to an agent who can list it for her if you feel so inclined)...if she wants to unload the asset for what she owes..then so be it...maybe she wants a little bit of cash on top to have something to live on...ok great. If you can buy it at a price that makes sense to either remodel and re-sell...or perhaps hold as a rental..then do it! Or make an offer...get the place under contract...and assign it to somebody else who can close the deal.

If you get your bank to give you a principle reduction on your residence and then "flip" the same property for a profit, wouldn't that be considered mortgage fraud?

The whole loan modification and workout process is for those who want to stay in their homes.

You were originally concerned with the legality that investors offer..and worried about the so called "black eye" it creates for the rest of "us."

However, you have basically stepped into that Gray area of investing with what you have done with your primary residence...especially if you plan to "flip" it now that the principle has been reduced.

If you were to look at your financial situation as an unbiased observer, what do you think your reaction would be? You're answer would be the same as ours, that you are responsible for your own situation and that your creditors and lenders are not fully to blame. They are making calculated financial decisions based on risk assessment...it isn't personal.

There has got to be personal responsibility here to a certain degree. Please don't victimize yourself.

And I don't think anybody here is judging you...we are just making a reasonable assessment of the situation and giving an opinion on how it was handled.

If your end buyer is cash then there are no deed seasoning issues and you don't have to worry about breaking the chain of title.

If your end buyer is getting financing then you might have a deed seasoning issue...FHA is 90 days, other lender's requirements will vary and some won't have any at all.

Now, if you are trying to sell your entity to the end buyer who is getting financing, then that might bring up even more issues with their lender. I haven't heard of many investors here in Portland actually getting financing to purchase an LLC...and i don't know if that is because lenders won't lend on the purchase of an LLC or simply because I just haven't met the person who has closed a deal like that yet.

I think we have to get back to your first question...which was how do you profit in an ABC transaction if you were to purchase with your LLC. This depends entirely on how you close the deal on your end...are you planning on actually using your funds to close (cash, financing, hard money etc...) and then immediately close again with the end buyer, or were you hoping to contract the end buyer, and attempt to use their funds in closing, or collect either an assignment fee or "finders fee" outside of closing?

There are a lot a fraudulent practices out there...the web site may have been warning about specific methods that may be fraudulent.

When it comes to the legality of methods I would always consult a real estate attorney if you are worried about being fraudulent.

Since you've got the option to purchase the property...list the property in your name with you as the seller (the option gives you that power, make sure you record the option). That way you will receive offers which will be written directly to you. They will be "subject to" you exercising your option...but will come directly to you which will protect your interest with the homeowner you have the option with. Because technically if they sell you an option...they do not have the power to sell to anybody else...which prevents them from listing the property with an agent...at least during the option period.

The idea being you negotiate your price directly with the bank...while you market at a higher price via RMLS...contract your end buyer, then once you get your approved short sale you already have somebody lined up to buy it from you at a higher price. Yay!

However, it's harder than it sounds. But that is the general idea.

I'm a little confused by the wording "approved bank short sale negotiation fee." Did that come from the agent?

Have you seen the actual approval letter that states the bank wants 599K by a certain date? Who has been in contact with the bank..i'm assuming only the listing agent.

Also, it will be very difficult to flip a property like this..especially since it is listed. If you plan to buy it, and then re-list it...why would anybody pay more than 599K in a declining market...all they have to do is look up either county records or the listing records and see that you just purchased it for 599K...which has now become the "market value" for that house.

You mention the appraisal value is much higher...what sort of documentation do you have to back that up...has there been a recent appraisal done (in the last 3 months?)

And if this property is such a good deal, how come there aren't others writing offers at that price...

Also it sounds like your plan is to contract it...have the listing agent cancel their listing with the seller...and then you re-list it with either the same agent or another..that might be a tough sell to the listing agent...all they really want is a transaction to go through. They really don't care if you make money or not on the flipping side...so be careful when you take advice from them on the current value.

Your exit strategy is important and you can sell to a financing buyer as well as a cash buyer...however it will be extremely difficult to double close (and when you say this are you actually going to fund on your end, take title, and then close again with your end buyer? Or use your end buyers funds to close?)

There are a lot of fine details that go along with a short sale flip...and this might not be the one for you to start with.

Find out when that appraisal was done...a lot has changed if it was done 1-2 years ago.

If the property is worth so much..how come the owner cant sell it for more? Is it listed?

The seller's opinion of value is worthless...and biased.