Begenner deal

I have a seller who is in foreclosure, with $1,800 he will be out of forclosure and in a forebarence plan. He just wants out of the property. He will sign over the deed to me with just 1/2 of the $1,800 as he will pay the other half. When the payment is paid he will sign it over to me and i will then get it recorded. Will this work and what are the issues I need to address?

Without more detail it sounds like he wants you to get into the frying pan. Posters need to understand that far more details are required before we can adequately respond.

All advice is welcome. Now for more details, The payments will be $1,200 a month after the first payment. PITI. How would it play out then for me? The bal the loan now is $106,000 the comps are $130k to $150k

…and, one you get the property, what will you do with it?

Live in it?
Resell it?
Rent it out?

Each of these, in turn, have their own set of follow-on questions. You don’t just buy property because you might get it for $900 + payments…


There re lots of basic information you should post for every deal that someone wants input on. They include:

Current “as is value” of the property
Amount of any repairs that might need to be done
ARV if any repairs or rehab need to be done.
If you are considering an assumption/Sub2 - then balance and terms of the existing loans
If you are considering a rent or RTO - then current and market rents for that type of property
Any other details that may be important - motivation of seller - problems with house or zoning, etc
What are you planning on doing with it - wholesale, flip, RTO, rent and hold

I think youre doing fine… Asking a question is sometimes the hardest thing to do especially when people start beating you up for being new…

With what you have outlined and with an asumption of an interest rate less than 8% you probably buying sub2 the existing loan and are okay if you resell the property on a Contract or using a wrap. You can flip but you dont have room for a Realtor with fees.

As for giving half of the money to the lender to get it out of foreclosure I would have the seller give me the money and then I would negotiate with the lender to put the missed payments on the back of the loan or spread them over the next 6 months… I may not even make a payment and work a short sale. May try to find a end user and sell the contract to them.

You have a ton of options… BUT you must get the DEED before anythng else…

Good Hunting

Michael Quarles

What state you are located ?.

I can tell you in Calif (and probably other states as well), based on what you have posted you would be in violation of several state statues. Granted there are no foreclosure police, but if this guy has a change of heart (which does happen after the heat of forclosure is off their neck) he could easily haul you into court and creat a load of trouble for you.

I’m not trying to scare you, but you need to understand what you are doing BEFORE you start the deal.

Well heck I am in California as well as a Broker and I cant see anything in his post that would cause issues with the “Foreclosure Police” . And I have done a bucket load of deals. No where in his post did he state that he was taking a deed with out proper notice… Not a single 1695 issue.

It is one thing to state the obvious and a whole other issue to give constructive advise… If you see issues with his post rather than state why not explain…

This must be the beat them up post of the new year…

Strange, I’m not seeing anyone being “beat up”…aak5454 simply stated, “…you need to understand what you are doing BEFORE you start the deal”…good advice in all deals.


I am still very newwww. Reading this post I was also wondering what laws would Salsadunes be breaking ? I am in California too, so it would be very helpful to me as well. Thank you.

Thanks for all the info.
The plan is to live in the home for 6 months to a year. Its livable now but needs some TLC. Seller is Divorcing and vacated the home, wife is also on board as she was the last one to live in it. They can not afford the home and want to keep from having a foreclosure, is there motivation. Who do i go to for drawing up the contract? Is it just a quit claim deed?

All advice on the documents to be constructed are appreciated.

You should have the contract… I’m sure that you can hire someone to write it for you but that is a basic part of real estate investing… You need to understand every paragraph.

Mine is 12 pages and is California specific and covers all of the legal equity purchase issues but since youre buying the house to live in you are not an equity investor… therefor dont have the notice requirements.

I would use a Grant Deed

Michael Quarles

here’s a good list of Calif codes (note, this is NOT my website)

I would draw your attention to Code sections 1695 and 2945. In particular take a look at 1695.13. In effect, you are purchasing $25-45K in equity for $900. I know some foreclosure experts far wiser and more experienced than myself who would be of the opinion that you are in dangerous legal waters. Draw your own conclusion and/or seek legal counsel.

Even if you are not in Calif, do you know what your state’s laws are?? Many states have laws that provide protections and procedures for homeowners in foreclosures.

Thanks again.
What can i do to cover myself with the equity part? As the seller understands the scenario and is in agreement. Can the equity be gifted? as is the case. Im buying it for what he owes on it. Its saving him from a foreclosure. wouldnt the bank rather not have a foreclosure?
Thanks again

I guess I better get out of the business… And we all better not buy any more short sales either… Let’s let the lender who loaned the borrower the money foreclose and keep the equity for themselves…

Buying a house in foreclosure is easy and safe as long as you follow the law…

1695.1. The following definitions apply to this chapter:
(a) “Equity purchaser” means any person who acquires title to any
residence in foreclosure, except a person who acquires such title as
(1) For the purpose of using such property as a personal
(2) By a deed in lieu of foreclosure of any voluntary lien or
encumbrance of record.
(3) By a deed from a trustee acting under the power of sale
contained in a deed of trust or mortgage at a foreclosure sale
conducted pursuant to Article 1 (commencing with Section 2920) of
Chapter 2 of Title 14 of Part 4 of Division 3.
(4) At any sale of property authorized by statute.
(5) By order or judgment of any court.
(6) From a spouse, blood relative, or blood relative of a spouse.

(b) “Residence in foreclosure” and “residential real property in
foreclosure” means residential real property consisting of one- to
four-family dwelling units, one of which the owner occupies as his or
her principal place of residence, and against which there is an
outstanding notice of default, recorded pursuant to Article 1
(commencing with Section 2920) of Chapter 2 of Title 14 of Part 4 of
Division 3.
(c) “Equity seller” means any seller of a residence in
(d) “Business day” means any calendar day except Sunday, or the
following business holidays: New Year’s Day, Washington’s Birthday,
Memorial Day, Independence Day, Labor Day, Columbus Day, Veterans’
Day, Thanksgiving Day, and Christmas Day.
(e) “Contract” means any offer or any contract, agreement, or
arrangement, or any term thereof, between an equity purchaser and
equity seller incident to the sale of a residence in foreclosure.
(f) “Property owner” means the record title owner of the
residential real property in foreclosure at the time the notice of
default was recorded.

1695.13. It is unlawful for any person to initiate, enter into,
negotiate, or consummate any transaction involving residential real
property in foreclosure, as defined in Section 1695.1, if such
person, by the terms of such transaction, takes unconscionable
advantage of the property owner in foreclosure.

Sweet, Iv looked up the codes and found the same thing. I appreciate your help MICHAEL and all others with your thoughts. Im looking to get this one signed today and will kepp all informed. This is my first deal and have alot of Butterflies couldnt even sleep last night overthinking it maybe? Thanks all

the lenders keeps no equity becuase by operation of the law they are only allow to collect the balance due plus cost of enforcing their lien(s). Any additional funds generated from the foreclosure auction trickle down to junior lienholders or the owners themselves. if no one bids, then the market has spoken as to what the value is and the lenders takes possesion of the property in order to satisfy the lien.

Agreed…Assuming that there were bidders at the auction who bid… and I agree with your argument that buyers set value.

So if buyers set the market value and I am a buyer at what point are you assuming that I am undervaluing the property and that value is unconscionable. Which, by the way, is the reasoning behind the 5 business days to rescind which this poster doesn’t have to honor since they are not an equity purchaser?

What amount of discount is too much to buy a house at? Are you assuming that a seller has to have wool pulled over their heads and be tricked into selling when the reality is I tell each of my sellers what the values are if they could sell using the traditional manner.

Furthermore if you take into consideration the costs to purchase, hold, repair and resell what should we adjust for those costs. And who is to say what amount of profit an investor should earn on each transaction…

A seller may want discount their house because they don’t want it anymore and don’t want the negative credit ramifications. What is the value of we investors saving them the credit headaches and hassles?

Now let’s look at the neighborhoods we protect by buying a house in foreclosure and rehabbing it thus protecting the neighborhood from a deteriorated house…

Again, yes there are laws in place to protect the seller however these laws are not in place to keep free trade from occurring… They are there to keep unscrupulous investors from grabbing deeds from a house owner who thinks they are getting a loan when in fact they are selling their house or an investor who blatantly lies to a seller…

If you look at the writing of parts of 1695 it can not even be honored. The Politian’s passed a law that can not be followed by someone who wants to follow it word for word. But that is a completely different topic.

They are not there to keep us from earning a living and from helping society rid itself from foreclosures.

Your fire is a big reason alot of us will prevail. And has given me a new spirit for getting this one done. I have been afraid to pull the trigger on alot of opportunities for all the nay sayers getting to me. I got a Grant Deed today and confirmed with the seller to meet with a notary first thing in the am. Its only one page, Is this all of it? I will take your advise and take the bull by both horns and get the money from the seller and ask the bank to put past dues on the back of the loan. But how does this play out with the due on sale clause once they find out he sold the deed? Will it raise an issue? I would consider refinancing after a little TLC. for better terms.

Any and all advice is welcome

I don’t know if it’s been mentione dyet, but do NOT sign that deed without getting bank to conceed to shorting that note. It’s not worth it to pay full price on the mortgage and have to suffer payments.

DO you have someone who would buy the note at a discount you can negotiate with the bank? SOmeone who could use rental income from SFR?

Or can you get a loan for the house if you can get the bank to short their note.

Hope this helps.

Sascha Wayne
wholesaler, NOrthern California