Question: When closing short sales and finding a buyer in 30 days or less, are you using a land trust to avoid the seasoning issues or are you double closing in your own name? How do you avoid the seasoning issues?
Answer: -It’s becoming harder and harder to perform a double or simultaneous closing because of all the mortgage fraud going on in the lending industry. However, there are a few title companies still around in certain states that will do this for you, you just have to find them. The land trust is used to provide added protection and helps in avoiding the due on sale clause. So using a land trust is beneficial even if you can’t perform a double closing. The most common seasoning issues come when you buy a piece of real estate for $100,000 one week and sell it for $200,000 the next. They begin to wonder how it doubled in price so quickly and you or your end buyer may have to explain that you got a good deal.
You find a property in default and the homeowner wants to work with you. Homeowner has a 2nd and 3rd junior liens on the house. Do I negotiate with these companies to forgive the liens? What if there is a lien for unpaid property taxes which I believe there is probably no negotiation. Should I just walk away from the property because it’s just not worth it?
If I do negotiate with these lien holders when negotiating with senior lender do the banks need to know about the other liens or they don’t care it’s all about them getting paid.
Also how does the title search work? Do I have to go out and pay for a title search on this property> If yes, how much is a title search and do you have any recommendations?
Lastly how do I get the customer to sign over the deed to me?
Thanks so much!!!!
No matter what, property taxes always get paid first, even before the mortgage. You want to negotiate with the 2nd and 3rd lien holders so you can create equity in the property because as it stands, there is none. You can even try the 1st. If they discount, it’s a bonus.
Yes, you need to do a title search so you know what liens are against the property. You will have to pay for this unless you have a relationship with the title company. It’s anywhere from $100 – $200. Just tell them you plan on doing several deals this year and you would like to use “their” title company for all your closings.
Signing the deed over is the easy part. Most homeowners don’t want the property anyway. Just put a Warranty Deed in front of them and let them sign. Just tell them this is what transfers ownership from you to me. You need to reassure them why you are doing this. I like to give them a purchase agreement so they have closure on their home.
If you are serious about doing short sales, you may consider ordering our step-by-step short sale course.