Owners want cash out - How to do this deal

There is a house that is presently empty. The balance on the mortgage is $108K. The fees etc due to Foreclosure proceedings is approximately $12K.
There is a second mortgage of $10K due to the County for Down payment assistance. The house is valued about $160K - $165K. The owners would like to get about $10K in their hand. How do you investors think I should try to structure this deal. :help

I do not have great credit.

The owners want $10k in their hand? So do I. What does that have to do with the price of tea in China? They’re in foreclosure… they’re not really in a position to make demands. They either want to sell the house and get out from under it or they want to make silly requests.

At any rate, say you bought this house, what would you do with it? Exit strategy makes a difference. Rent it? What kind of rental rates would you get in your area? Sell it? They want you to buy a house from them for $140k so you can put whatever repair money goes into it and then try and sell it at $160-165k? Sounds like a major losing proposition.

Have the seller sign a limited power of attorney giving you permission to speak to the lenders. Get a short sale package completed and summit it with your offer. The bank will to a BPO, try and be thee to point out what is wrong. you can summit repairs needed with offer. Ask for 80K plus 3% closing cost. You still need to negotiate.

You have to get the sellers to agree to a short sale. It doesn’t sound to me like reality has hit them yet.

The chances that the second will be forgiven are just about zip. If the county loaned the money, the county can get their money back.

If the sellers will not agree to a short sale, let it go into foreclosure and then buy it from the bank. The bank will probabaly pay off the lein from the county for the second, and it should be easy to get the house for the balance of the first, without the other charges and without the second.

Try talking to the county. They won’t forgive that note, but they might be very happy to allow you to take over the payments, so you don’t have to have that $10,000 as a lump sum.

Re: the owners want some cash, but in reality you can’t give the owners anything in a short sale deal, it is actually against the law, it is considered fraud. If the lender sees anything going to the owners they will cancel the deal and may actually go after both of you. We do alot of short sales and we see this alot but you have to tell the owners that it is not possible.

I know of some people that give money to the homeowners via a bill of sale showing they bought appliances or china etc. The short sale approval letter will clearly identify that the seller does not get a dime! If you give them cash whether its with a bill of sale or not it is fraud.

This may sound rude but I always point out to the homeowner that they already got their money in at least one way if not two different ways:

#1 they have been living rent and mortgage free for months!
#2 If they have owned the property for a number of years and they are currently overleveraged then at some point they probably re-financed. Did they pull cash out when they refi’d? If so then they already got paid!

Don’t we all want 10k. Sounds like the homeowner has not seen the writing on the wall yet. Maybe they are still in denial but either way…they are not motivated yet.