Short Sale twist ....

[realestateremedies 0]

Recently Ive been brainstorming to try to figure out a way that I can make a profit by finding properties that are eligible for a short sale, negotiating with the bank and selling them to someone else to make a profit. The thing is I DO NOT WANT TO TAKE TITLE.

 

The problem is, as most of you know, the bank will NOT approve the short sale if there is anyone elses name on the final settlement statement which makes assignment of contract impossible. What Im wanting to do is this. I want to submit the shortsale package in my buyers name and negotiate on their behalf. When I meet with the homeowners I will have them sign a contract between themselves as sellers and my end buyer. Then I will have them sign a memo of agreement with me. I will record the memo which effectively clouds the title. Then I will release the cloud for my fee (10K).

 

I see several issues and am not sure 100% how to get around them. I know banks are fine with me negotiating the short sale for another end buyer because Ive already done it and it wasnt a big deal. However, the fact that I am negotiating the short sale AND there is a cloud on title in MY NAME might raise a few eyebrows and Im not sure if they will go for it. Ive come up with several ideas to get around this.

 

First, Im thinking that by placing the cloud on the title in my business name, instead of my personal name ... it might go smoother because the cloud is not in the name of the person that is directly negotiating with the bank.

 

Secondly, I really need to figure out how I can record the memo with an exact dollar amount (10K) instead of just clouding the title. If I simply cloud the title, the title company has to call me to find out what it will take to release the lien. In theory this is when I would just let them know it would cost 10K to release it. I personally think it would go much smoother with the bank, since they will do a title search of their own, if I simply have a lien in the amount of 10K recorded in my business name ... against the property. I believe this might not cause as much concern as a cloud recorded in the negotiators name that has no exact dollar amount attached to it and needs further investigation to find out how to clear it.

 

So two questions:

 

#1 - how can I record a lien against the property with an exact dollar amount attached so that it will show up when the title search is done??

 

#2 - What do you think of this idea overall? Basically I would just be wholesaling the property but I would have to take title and my end buyer would have the equity in the property, I would make a profit, the homeowners would avoid foreclosure and the bank would get a default off their records. ....

 

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Any input would be GREATLY appreciated!

[Adam King (MI) 1]

Ji,

Since it is clear this post is about a "concept" and not an actual situation, I will answer it in the simplest terms possible.

 

You could try to place a performance mortgage on the property for your profit. This to me would be the only true alternative since you're trying to negotiate the least amount from the bank in the first place. It would show up as a second note/lien and you would be paid off at closing if the bank (first lien holder) would allow it and not ask questions. I could imagine they would have an issue if they saw the lien on title for a very short period of time and ESPECiALLY if it was with "soandso investments". I have never done this with a short sale so I would simply call my loan officer and they could talk with one of our lender's underwriters to get the answer. That's the best place I would start.

Hope that helps,

Adam

[RevNorth.com 0]

Why not make your offer in an LLC set up for this purpose, then sell the LLC to your final buyer, then they can close it--as the owner of the LLC--and no one's the wiser?