Pretty House deal

rjak

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I have a possible "pretty house" deal that I would like comments on. The property ARV is $420,000 but the seller is willing to sell to me for what is owed $365,000.

He is 1 month behind in payments but could bring current. His company declared bankruptcy and he had personally guaranteed debt for his company.

Would an "Option" be the best way to go or an "Agreement for Sale"

Can his company creditors muddy the title on the house?


Thanks in advance for any input

Ron Steel
 

EdRenkema

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QUOTE (rjak @ Oct 23 2009, 08:30 AM) I have a possible "pretty house" deal that I would like comments on. The property ARV is $420,000 but the seller is willing to sell to me for what is owed $365,000.

He is 1 month behind in payments but could bring current. His company declared bankruptcy and he had personally guaranteed debt for his company.

Would an "Option" be the best way to go or an "Agreement for Sale"

Can his company creditors muddy the title on the house?


Thanks in advance for any input

Ron Steel

Congratulations!
As RLG would say - Heart Rate Increase!

In my inexperienced opinion I would stay away from an `option` as it could create a stressful objection from seller, `Agreement for Sale` all the way especially if seller agrees to bring payments current. Try to get the 3 months payments going in, or explain how you will be giving them debt relief.

Can you share how you located this deal and the steps involved?
 

rjak

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QUOTE (EdRenkema @ Oct 23 2009, 09:57 AM) Congratulations!
As RLG would say - Heart Rate Increase!

In my inexperienced opinion I would stay away from an `option` as it could create a stressful objection from seller, `Agreement for Sale` all the way especially if seller agrees to bring payments current. Try to get the 3 months payments going in, or explain how you will be giving them debt relief.

Can you share how you located this deal and the steps involved?

The seller knows that I am in real estate and he approached me. I pretty much said nothing and let him talk. He said he would sell his house to me for what he owes and I have confirmed the ARV at $420K. Just looking at the best way because of his credotors possibly muddying the title
 

MonteDobson

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QUOTE (rjak @ Oct 23 2009, 08:30 AM) I have a possible "pretty house" deal that I would like comments on. The property ARV is $420,000 but the seller is willing to sell to me for what is owed $365,000.

He is 1 month behind in payments but could bring current. His company declared bankruptcy and he had personally guaranteed debt for his company.

Would an "Option" be the best way to go or an "Agreement for Sale"

Can his company creditors muddy the title on the house?


Thanks in advance for any input

Ron Steel
I agree the Agreement for Sale method would be most effective and I also have a similar deal pending (ie. I can get it for what they owe).

My question is how to "pitch" the benefits of the agreement for sale to them?? Also, Barry stated that the buyer should pay the seller the mortgage payments, and they continue paying lender. This is a bit out of my comfort zone and I am wondering if it is possible to pay the lender directly??

Monte
 

WJW

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QUOTE (C2Ventures @ Oct 23 2009, 12:23 PM) Also, Barry stated that the buyer should pay the seller the mortgage payments, and they continue paying lender. This is a bit out of my comfort zone and I am wondering if it is possible to pay the lender directly??

Monte

I`m a bit apprehensive about this too..

I`m not sure if you can pay the lender directly but I think Ron said something about opening a joint account with the owner that doesn`t allow withdrawls and would only allow you to deposit (electronically) into the account.
 

EdRenkema

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QUOTE (C2Ventures @ Oct 23 2009, 10:23 AM) My question is how to "pitch" the benefits of the agreement for sale to them?? Also, Barry stated that the buyer should pay the seller the mortgage payments, and they continue paying lender. This is a bit out of my comfort zone and I am wondering if it is possible to pay the lender directly??

Monte

Check your notes and manuals, Ron is all over this.
If this is out of your comfort zone why are you doing this?
The whole idea is to gain control of the property without taking over title and mortgage, create the win for the buyer and the seller and make sure your payments coming in are more than the payments going out.
 

GaryMcGowan

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QUOTE (C2Ventures @ Oct 23 2009, 12:23 PM) I am wondering if it is possible to pay the lender directly??

Monte

I talked to my Mortgage Broker regarding very question,
Here is an email I sent to him during the event last weekend.

Gary
"I`m looking at other techniques for buying real estate.
Will the banks accept a mortgage payment from someone not on the current mortgage papers?"

Mortgage Broker
"No. At least 1 of the mortgage holders has to be on the bank account for payment purposes."

I think the best approach will be to pay the agreed monthly payment directly to the Seller (owner).
 

tbarcier

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What is wrong with the Joint bank account? If you give the payment to the owner direct, what happens if they decide to spend it? Sure the banks will go after them, however you could end up losing in the end if the bank takes back the property, right?
 

GaryMcGowan

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QUOTE (tbarcier @ Oct 23 2009, 02:03 PM) What is wrong with the Joint bank account? If you give the payment to the owner direct, what happens if they decide to spend it? Sure the banks will go after them, however you could end up losing in the end if the bank takes back the property, right?

A Joint Bank Account would work, you can make it so you can only make deposits to it and the withdrawal will only be to the lender.
 

MonteDobson

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QUOTE (EdRenkema @ Oct 23 2009, 10:39 AM) If this is out of your comfort zone why are you doing this?
The whole idea is to gain control of the property without taking over title and mortgage, create the win for the buyer and the seller and make sure your payments coming in are more than the payments going out.
Ed, let me ask you this. You buy a property via agreement for sale. Mortgage payments are $1000/month, which you pay to the seller. The seller makes a couple of payments and then decides that he could use an extra $1000/month to pay for his gambling habits. Mortgage goes into foreclosure, seller moves to Costa Rica, tenant buyer does a midnight move and trashes your property...now what?? I am sure this is all covered in the Agreement for Sale contract, but I have not got myself up to speed yet...hence the lack of comfort.

But that is not stopping me as I have written 3 contracts this week ranging from $25,000-$180,000 in equity, so it could be a good week!
 

neill

Airdrie, AB
REIN Member
QUOTE (C2Ventures @ Oct 23 2009, 03:17 PM) Ed, let me ask you this. You buy a property via agreement for sale. Mortgage payments are $1000/month, which you pay to the seller. The seller makes a couple of payments and then decides that he could use an extra $1000/month to pay for his gambling habits. Mortgage goes into foreclosure, seller moves to Costa Rica, tenant buyer does a midnight move and trashes your property...now what?? I am sure this is all covered in the Agreement for Sale contract, but I have not got myself up to speed yet...hence the lack of comfort.

But that is not stopping me as I have written 3 contracts this week ranging from $25,000-$180,000 in equity, so it could be a good week!

If you are on AFS, then it is not your property that is trashed/foreclosed.....
Congrats as well on the three contracts!

I just made a call to a seller, that was determined to tell me the shade of colour on the paint/laminate/blinds etc etc etc - once you have determined they are a suspect and not a prospect, all I hear is "blah blah blah blah" - Whack!
 
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