Replies to This Discussion

Permalink Reply by Cindy LaPeer on April 29, 2010 at 8:04pm

I had sellers who let the buyers move in w/no money exchanged. BofA was all in favor of it so that the property wasn't vandalized - the owners lived out of state. Everything was going along well and the next thing I know, the ss is set for foreclosure the next day! We were right on track the last time I talked to the bank. It was supposedly just a formality b/c the first time we tried to do this short sale, the negotiator said I didn't send the HUD (even though I sent it the day she asked for a new one) and denied the short sale. Funny thing was that the HUD magically appeared in their system right after she denied it! But we had to start over like a new ss submission.

Anyway... BofA foreclosed on it even though they said it was postponed and we were good. The buyers were devastated as were the sellers. BofA was fully aware that the buyers had moved in but wouldn't let them just stay and buy it as a foreclosure. BofA paid them to move out, gave them 30 days to do so and then ended up selling it for a lower price than our negotiated ss price.

The moral of the story is... be very careful. SS's are not predictable and the buyers should be fully aware of that if they decide to move in.

Permalink Reply by Thomas McCombs on April 30, 2010 at 12:26am

If it were me, I'd go ahead and rent it to them, with lots of language in the rental/purchase agreement/addendums to the effect that the buyer understands the risk, and that you, the seller have no control over what the lender may do. And you might want to hold the rent received in an escrow account just in case you need additional negotiating leverage.

The only one at risk is the buyer/tenant, and as long as he understands the situation, you should be OK. (my CYA: but of course, check first with your legal/financial professionals!)

Permalink Reply by Gary Carpenter on April 30, 2010 at 4:15am

Alot depends on what state your in. I would need more information to give you an intelligent response. Let me know where you are in the process of the short sale, the state the the property resides and how close you are as a percentage to what the value of the property that the bank has. As far as the rent itself goes, I would keep that quiet. However, do not allow the seller to profit from it. Put the money in escrow and use it as part of the purchase price upon closing. If you throw that info to them now, it will just muddy the waters for negotiations. Good Luck.

Gary
[email protected]

Permalink Reply by William K on April 30, 2010 at 5:48am

Thanks everybody for the feedback. This is in Indiana. The progress on the short sale probably gives some indications that the short sale isn't that far off and foreclosure is not likely, namely:
- Before the short sale application was declined due to not being delinquent, BoA had made a counteroffer - meaning the BPO was done (and at this point is just a little over 1 month old)
- The counter that BoA gave accepted the price and closing date of the offer and the concessions the buyer had asked for, the only terms that were different in the counter from BoA was that they changed commission from 6% to 5% and they didn't accept some of the seller's costs which we reorganized in our counter.

The amount owed is $138k and the offer is for $125k.

If the planets were in line and I tripped over a 4 leaf clover, it might not even be an issue because the closing could still happen on time it seems, but it also seems that if there isn't any reason this couldn't be done maybe it might help at least ease the buyer's concerns and keep them from walking.

Permalink Reply by Gunna Voigt on April 30, 2010 at 10:18am

I have done it once, twenty yers ago. At that time it was called cram down judgment, since the bank was cramming down the money owed to them under the mortgage.
In my case, there was also a bankruptcy involved, which delayed it even more. But it worked out well, and dthe buyers eventually closed on the deal.
I don't remember quite well how the money part was handled, but I believe the seller paid the condo fees and taxes. What else the attorneys arranged, I do not know. But I would have the attorneys handle it, since we as Realtors are neither licensed not equipped to handle it without getting in trouble.