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TAT

Qualifying TBs on a CA...

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To Michael & those of you that have been doing CA for awhile...how well do you qualify the TB you are dealing with? Being that you are stepping out of the deal, does it matter to you one way or the other...or will you only assign to someone who has a high degree of getting financing? (and if so what degree)

 

Thanks,

 

TAT

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Hey TAT. I'm still new at this, but I'll give my $0.02...

 

I want the TB to exercise. Even if I did a CA and was legally out of the deal, I would still feel ethically bound to the parties. There were some "investors" doing shady L/O deals in my area over the past few years who put TB's in homes they would never be able to buy. Because of this, people in this area are now ultra-skeptical of anything creative.

 

As for the actual qualifying process, I have them complete a standard rental application complete with credit check and references. I also want them to work with a loan professional to see where they stand on financing and how they can fix their situation.

 

I look at the "degree" in terms of time and probability. Will it take this person 1 year to be able to get a mortgage? 2 years? What is the actual likelihood of this person following the recommendations? Obviously these people have had something go wrong for them in the past, otherwise they would have qualified for standard financing. What I want to know is: Did bad things happen to them, or because of them.

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Hey TAT. I'm still new at this, but I'll give my $0.02...

 

I want the TB to exercise. Even if I did a CA and was legally out of the deal, I would still feel ethically bound to the parties. There were some "investors" doing shady L/O deals in my area over the past few years who put TB's in homes they would never be able to buy. Because of this, people in this area are now ultra-skeptical of anything creative.

 

As for the actual qualifying process, I have them complete a standard rental application complete with credit check and references. I also want them to work with a loan professional to see where they stand on financing and how they can fix their situation.

 

I look at the "degree" in terms of time and probability. Will it take this person 1 year to be able to get a mortgage? 2 years? What is the actual likelihood of this person following the recommendations? Obviously these people have had something go wrong for them in the past, otherwise they would have qualified for standard financing. What I want to know is: Did bad things happen to them, or because of them.

 

 

Hey jhanson8,

 

Thanks for your input. I have done a several LO and have gotten my buyers qualified every time. As you pointed out about the shady deals... which is why I was asking the question. I have yet to do a CA, but thinking about it and wouldn't want to fall in that category.

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TAT, my preference is to have the homeowner decide who will live in their property. I bring them the prospects and they run the necessary checks and do their due diligence and make the decision. This way they can never come back to me and say I stuck them with some deadbeat, etc. It's their house, it's their decision.

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michael c,

 

If you are doing a CA and the owner's decide on this person that your recommending to do the lease option with. what happens if the tenant buyer stops paying rent? the owners might call you and demand you to help them to evict the tenant buyer since they used your contracts and you recommended them. do you have any responsibility or anything to worry about if you assigned the contracts with everyone signing the assignment agreement?

 

also, are you doing mostly CA's right now and staying away from sandwhich deals?

 

thanks

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If you are doing a CA and the owner's decide on this person that your recommending to do the lease option with. what happens if the tenant buyer stops paying rent? the owners might call you and demand you to help them to evict the tenant buyer since they used your contracts and you recommended them. do you have any responsibility or anything to worry about if you assigned the contracts with everyone signing the assignment agreement?
That's the precise reason I do things the way I do them. The paperwork covers my back, and by requiring the homeowner to decide on who moves into their property, I am pretty much out of harms way if something should go wrong. That said, anyone could still come at me and file a suit. That's a sign of the times we live in. But I'm confident it will be an uphill battle for the homeowner to win that case in court.

 

also, are you doing mostly CA's right now and staying away from sandwhich deals?
Yes. The market is such that CA's are a wiser approach these days. Values are plummeting, and many homeowners don't have the equity needed to make the deal attractive enough to want to be in the middle. So I would prefer to assign the deal, get out quickly, take the money and try to do another.

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Guest jvmccall

I tell my sellers and tenant-buyers that while my program is "no credit qualifying", I am really only looking for 5 things:

 

1) can they afford the home / do they have a good job,

2) do they have a good rental history,

3) does my mortgage broker think they can get a mortgage in 1-2 years,

4) do they have a criminal background, and

5) do they have enough money down?

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