Real Estate Short Sale and Investor Advice needed

Hey everyone,

I’m working with a wholesaler as a business partner. I’m wondering if there is a way to structure this deal to purchase from the wholesaler to benefit all. It’s going to be very unconventional.

The house

ARV ---------------$130,000.00
Repairs---------- -$30,000.00
Balanced owed $91,000.00 behind two payments of 1100.00 each.

The homeowner wants to get some equity of $15,000.00. I thought there is no way for that in the condition of the house. I would only give $59,000.00 for the house in the condition it is if I were to purchase cash.

I’m wondering if we could give the homeowner somewhat of what she wants using a hard money lender/private and catch up on payments, continue to pay the loan, in the process do a short sale for us to get the house cheaper and then sell the house. Maybe owner finance or create a a note and sell it type deal.

I think there is a creative way to do this and I may be wrong about the whole process but that is my idea of how it could work. Please let me know what your thoughts are.

Here is my suggestion: Don’t pay the seller any money. There clearly isn’t any equity in the home, if you are only willing to pay $59,000 cash for the home. Likely it is underwater - more owed on the property than what it’s worth. With the homeowner being behind two payments its only a matter of time before the home will be in formal foreclosure. If you short sale the house the bank/loan servicer will not allow any money to be paid to the homeowner anyway and you cannot pay money to the homeowner out of your pocket. The best approach might be to use the Home Affordable Foreclosure Alternative (HAMP) program. Under this program you can purchase from the seller for less than the amount owed, the homeowner can qualify for money from the bank for relocation and once the deal is closed you can rehab and sell if it makes sense or just flip the property to another investor for a profit if the numbers make sense.

Check out the HAFA program at the U.S. Treasury Departments website. On February 1, 2011 new laws apply which require the bank to approve a short sale offer or make a counter offer within 30 days from the purchase offer on the property. At least check this out as an alternative. It might be a better approach for you.

Hope this helps.

I think 2011 will be better and this law will be helpful for everyone with the advice provided.