I received the following offer from a broker. Let me know what you think about this deal. One of my main concern is: Most of the homes around this property is currently valued below $400k. So if I do this deal at the bank short-sale offer at $410k it looks over-priced to me considering the neighborhood.
Approved short-sale of $410k by bank. “And the homeowner is willing to do a 24 mos. “Lease Option to Purchase” with a $15k downpayment @ $2,000/mo. & a buyback price of $439k. So now you would have an immediate cash in pocket for $15k, a secured equity of minimum $29k (if market value exceeds $439k in 24 mos., you have the right to sell it to others), and a secured tenant in there already paying @ market rent price who would totally take care of the house (repairs, garden, property tax…etc.). *50% of the rent would apply to the final purchase price if you decide to sell it to the current homeowner.”
It is illegal for you to buy a property as a short sale and scheme to sell it back to the original owner. The legal definition is committing Fraud as you become the straw buyer with the intention to cause the lender a loss (Short Sale) with the intention of enriching yourself (Profit) and original owner (Property for less than was owed) by a short sale.
If you have a desire to spend time in prison there are easier ways to do it, like robbing a bank!!!
Don’t be stupid and don’t break the law! You should not even be touching a $400k property for $400k, this is no deal!
GR, relax…noone is committing fraud here. This is why I’m asking for opinion. I do see your point. Let me ask you this. If I buy the property then lease option it to someone else other than the property owner then it is ok?
Absolutely! If you buy it for $275k! As an investor reguardless of the purchase you always want to buy right as $400k is way to much for a $400k house!
GR
Thanks GR. So do you know whether the bank will negotiate down a home price after they have approved a short sale and given their short sale approved amount?
If FMV is $400k reguardless of the original loan amount, make this lender an offer for what ever amount makes cents to you, most lenders realize and expect to have to discount to move the property fast and avoid having to foreclose.
Keep in mind that the original lender will have to keep 4 times the face value of the note in reserve until they dispose of the property, and there is no guarantee the property will sell at the trustee sale, so they could be stuck with and have to dispose of it as an REO.
I think an offer discounted 25% is in order, all they can say is “No”!
Deduct any other rehab, remodel or clean up cost’s and closing cost’s from your initial offer, I think this will put you below $294k!
Remember you will have a good size mortgage on this property, so be aware of what your doing with it and your exit strategy?
GR, thank you again. I’m not going to do anything with this property. Any advice on how to negotiate a lower price on a property? If you can give me like a step-by-step scenario would be helpful.