I need some advice. I have this client who has somehow managed to miss 35 payments to her bank and they still have not foreclosed on the property. For whatever reason she is finally tired of dealing with the property so she contacted me about getting rid of the property before it is foreclosed on and it goes on her credit file.
The property is a brick 2 flat located on the west side of Chicago, (Cicero/Jackson). The building has been unoccupied for 2 years and has numerous municipal fines for an illegal basement apt, loose bricks, etc. The general condition of the building good. I guesstimate the cost of repairs to be $55k.
Here are a few numbers.
Loan balance: $151k
Amount behind: $50k
Comps ARV: $250k-$275k- this is based on 6 sales in the past 6 months for same number bed/bath and similar size (+/- 100 sq ft).
My question is what is my best strategy for this property? I would like to rehab then sell. I was thinking short sale, but with the fast appreciation of the area (8 minutes from the loop) the bank might just want to sell the property for themselfs. This weekend I am going to get her to sign a sales contract but after that how do I proceed? Thanks.
I would try the SS. Waiting to get the contract NO, from now on if a person says they’re ready, go get the contract signed that day, I waited once and the house was sold to another investor. Call your seller so that you can gather all the neccessary documents to get everything done this weekend, pics, pay stubs, bank statements, financial statement, mortgage information, hardship letter, etc. Get your packet together and make it happen. Sometimes you are afraid to move especially on your first deal, I know that I was, but you have to just dive in and trust that you have done your homework to get it done.
I agree with Ctally, wucha waitin fer!
Don’t be afraid to move on something as long as you’ve done your homework.
Note: You should always have at least one “out” written into the contract. Just in case an unforseen comes along. Inspection clauses are a good one to use as well as “clear title” and one more if you are financing “30 days to obtain mortgage…”
I am prepared to jump in, but it is a little intimidating.
Using my numbers, what would be the max amount I should pay to turn a decent profit? Should I shoot for $260k * .7 - $55k?
i do not think this lady will be willing to give me all of her financial info. Is this a very important part of the SS package? I would think the bank gets the point that this lady cant/wont pay after missing 35 payments.
Anyone have a good example of a sales contract or P.A. to use? Most R.E. contracts I’ve seen have all sorts of clauses dealing with termites, lead paint and other disclosures. To make the best presentation to the bank, how should those type of things be handled?
I have a ton more questions but will reserve them for later. Thanks
Yes, it can be. I would shoot low. Make sure you figure all your costs. Repairs, Mortgage carrying, purchace realtor fees closing costs everything. If it is 70 cent on the dollar then so be it.
Make your offer, and most important of all, make sure the numbers make sense to you. Always assume the worst.
That’s mind boggling she has missed 35 payments and no foreclosure. WOW!
Yes, her financial information is important to complete your SS packet because those are things the bank will ask for, just let her know that you are trying to help and that those things are necessary for you to do your job and settle her issue. Again, DON’T BE SCARED, and never try to answer for someone in this line of work (or any other for that matter), you have no idea what their response will be until you ask.
When I did my first SS, it felt like it had fallen apart three times in the week we closed but we stayed focused and kept pushing and it got done.
here is anthoer option for your client she can refinance her home to save it. If you are more interested in your client behave you can let her know that its not too late to refinance and get out of the pre-forclosure that she is in.
Thanks,
Latoya Calder
Everone in this forum is all about themself instead of helping the lady save her home everyone is thinking about themself. No one ever think that she might have kids or a family who no might not have no where to live. The only thing that everyone is discussing is whats best for them if i was in that situation who prefer to refinance my home. her rate who be around 8or 9 percent but the thing with refinance is that you can always do a rate and term later if she loses her home she have to start all over but no why don;t everyone here just think about themself. That si so selfish to me. I have a lot of client who comes to me because they are in foreclosure i help them to keeptheir home because they have a family and i would like for someone to help me if i was in that same situation i would not like for someone who i think is going to help me keep my home try to take it form me behimd my back.
I’m not trying to be rude or anything but why do you think that a person who is 35 mortgage payments behind is magically going to be able to refinance their home at 8 or 9% and all of a sudden they will be able to afford a payment that will no doubt be at least double what it was before. Not to mention the 10-15k in closing costs I’m sure your charging them.
No sweet heart first of all i donot over charge my client due to the fac tha tI donot have to split my commission with no broker i am the broker. she can always refinance and put some money in her bank account or pay off some of her debt or she can payoff all of her debt so she will not be overwhelm with debt each month.
I as well cant believe the bank would allow her to get away with missing 35… 36 payments as of today. This without being in bankruptcy. Apparently she put a down payment on the property and has not paid since. This lets me know that she knows how to “work the system”. I’m on the watch to make sure she does not “work” me.
Ctally-
Thanks for the motivation. That’s what all of us new investors need. Its crazy how many of us live our lives without ever achieveing our full potential. I know that up to this point in my life I have not done even 10% of what I can do. I have friends who have graduated from the U of C and Northwestern and trust me, you would not want them to handle much of anything, even dog walking, outside of their field of study. I’ve known people who in other circumstances could have run a multi million dollar corporation, but they like me have let certain fears rule them. Crazy! I am trying to break though my fears.
Lscalder-
I would loved to have helped her in the capacity you mentioned. I would never want to see a single lady and her children out on the streets, but she wants to be rid of the building. I as well feel she could likely refinanace, but that is not her goal, at least as far as I’m told. She has another house, custom built she tells me, that she and her family live in so I am not to concearned about her well being.
I will keep you all advised on the progression of the deal. I hate it when you never find out the outcome.
No one in this forum made this lady default on her mortgage we are simply trying to help her out of a bad situation, which is how we support ourselves and our families. It is amazing to me that you would see that as not being helpful, not being helpful is asking her to refinance a property that she already can not afford and continue to tie her into a dead end situation, we help people avoid foreclosure and bankruptcy so that they may have a fresh start and maybe be more realistic about what they can or can not afford next time, or whatever their situation may be no one’s circumstances are the same. Aside from all of that, this is a forum for REAL ESTATE INVESTORS, a REAL ESTATE INVESTOR asked a question on how best to assist his client in what SHE HAS CHOSEN to pursue, and that mydear, is a way out, and other REAL ESTATE INVESTORS started giving him good advice on workable solutions for both him and her; why are you here again, MORTGAGE BROKER?
I am also a realestate investor thank you very much. you can’t handle the truth can you. Now thsi guys seems like he is considering the ladies own interest but it seem slike to me from your response that if it was you with this oppprtunity you would not think once about this lady option or what she wants. may be you should think about ohter people feelings. Now you never know what is going on in this ladys personal life to make her not make her payments maybe a family member is sick or she is going through alot of things but that doesnot mean she wants to give up her home.
Example: i have a client who is behind in her payment the bank filed for foreclosure i help her to refinance her home. she fell behind her payments due to her mother got sick and she had to pay for the medical bills but that doesnot mean that she doesnot want her home. That was the best thing for her to do was to refianace as long as the bank approved her how would you feel if you had a family issue or problem and you fell behind on your payments would you like for a investor to come a long and say i will help you by taking your home so i can get all the money cause i am so selfish all i think about is myself cause i am an investor who cares about you and your family because thats what investor do. we try to get as much money as possible so we can die and leave it behind cause i am a greedy investor. one thing i hate is for people ti think about themself
No, we can’t handle the truth, evil, evil, investors who will sell their souls for a dollar.
Do you proof what you write before you post it?
Well, I for one am well trained in Mortgage Remediation so homeowners whose set back was/is temporary I work with them to explain their situation to their lender, send documentation of their ability to pay, and devise a workout plan, preferably a loan modification, which does not include an unreasonably high payment, free of charge.
There are a lot of unscrupoulous investors out there but many of us are truly good and have their clients best interests in mind. Please remember, you can not make a grown person do something that they are against, we are there to help when no one else will, or even knows what to do, and to date ALL (100%)of my clients have sang my praises after our transactions were done.
May be you are one of the good investors who do not take advantage of other people who are in desperate need. I didnot mean to sound mean but i know that their are some investors that the first thing that comes to their mind is how much money can i make their are some who don’t even think about he other person situation and how they can help. I know everyone out their is trying to take care of their families i understand i just had a bany 2 months ago but i still considered other people feelings because people remember we are not going to die with the money the money will be left behind so fo others to think oh i want to be so rich and wealthy that when i past away i can have everyone fight over my monies. i respect you for being so honest to your clients but for those what goes around comes around and god is always watching do you ever notice that the worst things always happen to this ewith all the money although they have the money why are they the one who seems to be so depressed or is it htat money doesnot make you happy
Latoya,
Our messages had to have crossed eachother, but I agree with you 100% and I appreciate your response. Congratulations on the baby and blessings to you and yours.
How receptive are banks to SS when the property is not in foreclosure yet?
What are the odds you can SS when the homeowner is behind a few payments and can’t pay but not yet in foreclosure and tells you they cannot pay bank again and want to exit the house with your help?
Do you get the bank to sell 10% of the time or is it more like 40% of the time before foreclosure? I am just trying to see how profitable it is to try and SS before foreclosure.
