I have the opportunity to do a lease option on a home. the home is upside down and need to be short saled which the owner is fine with. my questions are is there any smart way to do this? It is a really nice home that I want to buy to live in but cannot qualify for at the momment.
the house is valued at about 285K they owe 400k and both first and second mortgages are with bank of america. not sure if this is even plausable? any thoughts would be appeciated.
What is the option to buy price going to be? Most people here would probably agree with me that 1 out of 10 short sales actually go through. It may have changed a little to the better in this market but my point is that you can not count on the bank saying yes. I can assure you that they will not say yes to a short sale if the payments are being made. They say OK when they see no other option of getting their money.
I don’t set myself up for getting scammed.
This is how I see it. You will put down a big chunk of cash. Thousands for the option to buy and it will be non refundable if you don’t exercise the option. You will start making your lease payments and the owner will make the mortgage payments with your higher than normal monthly lease.
You will get to the end of the year and it is now time for you to exercise the option to buy or forever loose your money. You will go to the bank to try to do the shortsale and they tell you to go pound sand, that the payments were made and why should they discount the mortgage. The owner has a big smile on his face now. You will buy his problem from him for 400K or loose your money.
You try to buy the house and no bank will give you a loan on a house that is actually worth 285k. So you excercised all of your options and tried to exercise the option and you ask the owner for your money back. He says the kitty said tough titty when the milk ran dry and he lease options it again.
If you don’t presently qualify for the loan than this is a deal that you need to run away from. Wise people never do a lease option on the assumption that they will be able to later do a short sale.
Lease options most often benefit the seller and not the buyer but there are exceptions. This scenario is not an exception.
Get it?
From past experiences in SoFL market, BOA is rather difficult to deal with and does not seem to want to discount mortgages to much, especially the 2nd. Your best bet and you never know if it is doable, get a power of attorney signed and start talking to the bank. Let them know your interested but your not looking to throw your money away, You want to pay them directly, not give money to the owner. See is loan can be modified to something you can afford and what kinds of numbers. Look into a contract if possible with BOA. They maybe happy to see someone paying a reduced but doable mortgage for the next 2 yrs on the house.
I would not give the owner any option money. He does not deserve to walk away with a dime in the transaction. House is upside down, how can he justify a profit?
Just lease the house with a nominal rent payment to seller and get an option to purchase and get to work on the deal. If it doesn’t make sense before it forecloses just move on. I know of some instances where it is taking almost 2 years before a lender is actually at auction from the 1st day of default.