??? I am just starting out in RE and have a question about foreclosures. There is a house in my neighborhood in foreclosure. They are asking 135,900 for it. It sold for 169,000 when new. It needs some cosmetic repairs and would sell for around 170-175,000 now, based on other sells in the area. Is there any way to tie it up (option?) without putting up a large sum of money? I would like to “flip” this property, but don’t know if I actually have to “buy” it before I could sell it. I would like to put up a small amount of money (earnest money?) to prevent someone else from buying it,but can’t afford to purchase it myself. Is there any way to do this? Based on sales in the area, this home would sell in around 60-90 days. Any help??
You could put a contract on the property and set the closing date as far away as possible. Then you could “market” the property to rehabbers and assign your interest in the contract (make sure that you make the contract assignable).
You might make a tidy $5000.00 profit without doing any of the work. Worst case scenario is that you lose your deposit if you don’t close or that you close and take title and rehab it yourself.
Do not give any money to the seller. Put up at title company or your attorney as trustee. I tried to buy a house in Houston once in pre-foreclosure. She sold it over 9 times to different buyers including me. A lot of them gave her money. Turns out she deeded the house to her attorney months before the posting for payment on her divorce. Be careful too because you may not have enough time to market it unless you stall the foreclosure.
From what ive read, if you are going to give up any earnest money it should be kept in trust with a third party, such as an attorney or title company.
Especially if your lender is a private investor and the money is going towards repairs. It can be possible that the lender may have some cash flow issues and not pay you. Putting up the money with a third party will insure you get the money when needed.
So it is wise to insist that any money, if its just earnest money youre putting up or even money that you borrow for repairs should be kept with a third party.
Yes, you need to leave yout money with a trustee. And with a clause that it has to be deposited only after all the inspections and everuthing else has been done…