split profit with seller and still do a short sale?

I’ve recently skimmed over bill Gattens ebook.
In there one of his method is to purchase the property at full price and even split the profit with the seller.

My question is can one still do a short sale and split profits with the seller?

From my other readings when doing a short sale, you have to turn in a hardship letter. Once the lender finds out that the seller is getting some money, all bets of doing a short sale is off? At least this is what i’ve read?


In my experience (albeit limited) a seller can recieve NO profits when a bank agrees to a short sale. Why would they want to LOSE money, and let the seller MAKE money? I could be wrong, as I haven’t done a short sale myself, but I don’t think I am.

Happy Investing,


You’re right - I’m working on a possible short sale right now and have an end-buyer lined up (these stupid Md. foreclosure laws!!) and the sellers cannot receive any money from the deal, just as Alaska said - why would they let the seller get some dough when they are agreeing to take less than what is owed on the mortgage? The bank figures - give that money to us!

The seller can’t make any money from the home, but there’s nothing to keep you from buying something else from them at a very high price…

Example: you do a short sale on the house and end up making $20,000 profit. The seller makes no money at all. As a separate deal, you buy a mountan bike from the seller for $5,000 or $10,000. All perfectly legal.

Scandalous :wink:

Yea, I have heard that done before.

Well, I guess Bill Gatten the guru was referring only if he was buying to property without doing a short sale. Only then you can split the profit. I’ll have to cut and past that paragraph this week.



The approval letters from three different lending institutions have said this:

1 - The seller will not receive any proceeds from this short sale transaction. If there are remaining escrow finds or refunds of any kind, they will be sent to Litton Loan Servicing LP to offset the loss.

2 - The seller is to receive no sale proceeds in this transaction. Any excess finds as a result of this sale must be forwarded to Homecomings Financial.

3 - The sellers/mortgagers may not receive more than $0 in this transaction at closing. (JP Morgan Chase)

It’s up to each of us individually to decide to do things ethically or not. I recommend that we keep things impeccably ethical. I am afraid that if we are NOT ethical, banks and/or legislature will make things more difficult for us all.

The Default Doctor

Default Doc,
I could not agree MORE. It’s because of this shhhh. . tuff! that newbies like myself and other investors in Maryland are essentially screwed and have to work 100 times harder with this market here because of recent laws enacted to prevent this unethical behavior, obviously propagated by a few unscrupulous investors here over the years. It’s possible to do but we have to tread very carefully if we don’t want to go to jail for 3 years.

And for those of you who don’t think this is a problem for you, it isn’t. . .yet. Trust me, it’s coming to a state near you. Let’s hope later, rather than sooner!

Can I get me one of them there $10,000 mountain bikes? There’s no mountains here but i’m hearing they might build some here soon!


Howdy Keith:

I will check with Lance to see if he may sell one of his bikes for $10K. LOL

Problem is: Lousiana is flatter than the proverbial pancake…I think the highest point in the state is the water slide over at Exit 7 of I-20! And, no, they won’t let me ride a bike on the waterslide, I already checked!


I’ll see if I can find some for you. :wink:

For the record, I’ve never done that. For the sellers I’ve worked with, the fact that a foreclosure wouldn’t be on their credit report was motivation enough for them. I’m certainly not going to offer to split my profit with them.

We certainly hope not…most of us are pretty much about scrupuously clean/honest dealings with other folks!