This may just be my big break!! Need helpp

This may be a solid deal! :banana

I have a homeowner behind 4months, she’s also a real estate agent. She bought the house 2 years ago for $300k, renovated the interior/roof, and still owes about $300k, and has the house listed right now for $450k.

It’s over priced.

She said she’s been getting many calls from her listing, but she hasn’t been showing the house b/c she ran out of money while fixing the front steps, which needs about $5-$10k of work.
I don’t know why she doesn’t just reduce the price and sell at $350k or so

I wanna do a short sale on the house, but house has equity, would the bank take any reduction? Comps in the area suggest this house can sell for up to $400k, conservatively.

She said she’d take $10k from the short sale deal, I told her I can’t promise her $10k, because of the nature of short sale deals. So I haven’t won her over yet. :banghead
What should I do?

I’d be willing to give her the $10k with no problem, but only after I get paid fully and my profits are above $10k. But I want her out of the picture. I want her to hand everything over to me, and be happy with $10k when I sell her house and potentially make up to $50k+ for myself.

My approach is to:

  1. Go ahead and do the short sale, I have nothing to lose. A small reduction in price is better than no reduction at all and given the house needs work, I have a good chance.
  2. If I get the house reduced to $275k, I’ll buy it myself, fix it, and resell it for at least $350k
  3. How do I promise her the $10k and have her cooperate with me asap?
  4. I’m kind of lost! :help

I wish I could just put $10k in escrow somewhere, have her deed everything over to me, keep the mortgage in her name, fix up the house, and let her get access to the $10k only after I’m done doing everything! This is my imagination talking, but can I do this?

What other approach can I take?? I don’t want her to back out of the deal once I get things started. :huh

It’s my understanding that if you do a short sale the seller is to receive nothing. The lender does not want the seller to get any money if they are agreeing to discount the loan. I don’t think you want to go there.

Also, it sounds like this home has a least some equity, will the lender really approve a short sale?

You’re right, the lender doesn’t want the homeowner to make money. But, I’ll have to cut her a personal check. It won’t be part of the deal with the bank.

The home has equity, it needs repairs, the market is down, homeowner will foreclose… so why wouldn’t the bank take a small $20k hit? It’s worth a shot in my opinion. $20k in this case is significant for me.

I don’t do short sales, but I believe one way is to have a regular agreement to buy her TV from her for $10k pending the success of the short sale and the purchase of the property.

I was considering this method too, but I was told that the bank has a limit to how much they’ll allow you purchase from the homeowner. I’ll keep this mind though… thanks.

Bank doesn’t know about it since it is a personal purchase and not a real estate purchase

I’ll probably get ripped for this opinion, but I think your thinking on this is unethical. You are trying to steal this lady’s equity and it is what gives other FC investors a bad name. This is why states are passing the 82% laws about buying foreclosures.

YOU KNOW there is 50K equity in the house right now. Tell her to lower the price to 350K and move on to a REAL short sale. There are plenty out there. Or a the VERY LEAST buy the house now for the 310K, and truly help her save her credit. You will still profit.

What we do is SUPPOSED to be helping the homeowner out of a jam while still making some profit. What you are doing is trying to keep her in the dark about her options and take her equity AND you want to take some extra from the lender too.

It is disheartening to me that you consider it your big break to have found a homeowner so dumb you can steal from her. That is not a break, that is a crime, IMO.


I understand what you mean, and I realized that I presented the deal wrongly because of my excitement. Keep in mind that this lady is a full-time real estate agent. She knows more about her area than I do. I asked her myself of what she thinks the house is worth after fix-up and she said $430k and that she even had a potential buyer.

I don’t know why she doesn’t reduce to $350k. I’ve only had a few conversations with her and it hasn’t come up. But it really isn’t my business… is it? I’m addressing her concern, and her concern is to get rid of her bad investment and walk away with $10k.

I’ve passed by the house and only seen that the steps need repairs. But, maybe there’s more inside the house that she hasn’t told me of yet? I’ll go see the house within a week or so, and report back here. She bought the house 2 years ago for $300k. There hasn’t been much appreciation in her area since that time, so I’m a little confused myself on why the comps are showing such higher prices.

I’m in no way taking advantage of her. If she was the average joe schmo and unaware, then it would be different. She’s probably has more knowledge than I do! What if she’s hiding something from me?? :anon

As far as the lender goes, I’ll take as much from them as I can. There’s a good chance they may not agree to anything and I just wast all my time. I don’t see anything unethical about that because it’s purely a factual-based, BPO-examined, comps-analyzed mutual agreement. And I’m presenting them with a quick settlement rather than foreclosing on the house. :biggrin

Thanks for the reply though, I’ve read your posts before and you’re advice/knowledge is always good.

Thanks for not being too sensitive about my comments.

It is odd that she is a Realtor and doesn’t seem to know the right thing to do. She could either be clueless or trying to take advantage of you somehow (look for other liens). But in my opinion, neither of those options are deals that I want to be involved in. I don’t want to take advantage or be taken advantage of. Karma.

You can take the attitude “it isn’t my business” but I frankly think that is a cop out. You see someone who is screwing up and needs help, you help them, you don’t take advantage. You see the drunk chick leaving the bar…do you help her get home safely or do you take her home for some semi-consensual sex? Or do you just say…not my business and let her drive home drunk? There is only 1 “right” answer.

I think you should have the conversation with her…if anything it will clue you in to her mindset and maybe let you know whether she is scamming you. She may say, I don’t care, I just want out…then you are in the clear ethically. It is a win/win to have an open, honest conversation.

As far as the lender, I have no problems with that. They are big boys who can take care of themselves. Seems a very long shot if the numbers are what you say, but who knows. But if the numbers are what you say, why walk if you can’t SS? Buy the thing for 310K, fix the stairs and flip it. As long as you have done your research it is a moneymaker.

As the numbers stand, I would say it is highly unlikely that the bank would even consider a ss on the property. When the BPO comes back at 375k+, the bank is probably going to tell you to get lost.

You could try the short sale, but your time would be better spent working a traditional sale in my opinion.

Good Luck. Keep us posted.

i have dealt with many realtors who don’t have a clue much less know about short sales - it always amazes me

if a realtor puts up their own home for sale and ends up they need to sell as a short sale - they can get paid for it - the way it would happen is through their broker - that is if they are not the broker - the broker is essentially representing the sale of the agents home, not the agent - i see this all the time - since the market has gone south, realtors are feeling the pain in their commissions and having to short sale their homes