I met with my first prospect today. She two months behind, and she wants out badly. She agreed to a short sale. I going over tomorrow to sign the contract. I plan on putting the property in a land trust so I can flip it to another investor and do a double closing.
The property value is $410k
The loan balance is $325k first and $30k second.
She Owes $5200+ late fees
Recent sales in the area are between $300-360k.
What kind of contract do you use, standard or Investor base?
What should I add to the contract to secure my exit?
example: contingent upon approval from the lender_contingent upon buyer’s partner’s approval.
I would focus on getting the lender’s approval of short sale. That alone will take all your energy and patience (take some vitamins this month). Use a standard purchase agreement. No sense confusing the lender with new fangled contracts. This will take time, but be ready for when you get approval. The lender may require a 10 day closing once you have approval.
I thought about doing a purchase option, but she has an ARM at 8.75% she is paying $2600 a month. That’s a $1000 above the market rent in that area. Also the 2nd is with her brother so it should be easy cause he wants to help her out of the situation and he’s wiling to discount.
She is a single woman in her 60’s and just cant afford it any more plus she’ all healthy right now.
Allin08, What would be your scenario on a purchase option in this situation?
The option contract is a method of purchasing for a short sale. It is not a lease option. The market rent has nothing to do with it. By using an option and recording the memorandum of option you have an equitable interest in the property and it helps to alleviate some of the seasoning issues for you end buyer if the are not paying cash but need to finance.