How Much Research Do You Do Before Making An Offer?

[MichaelGibson 0]

On a CA, should we be concerned with whether the L/S is contracting to sell the property for less than what the mortgages, judgments and liens are on the property, and thus possbily putting ourselves in a "delicate" situation with the T/B?

[MichaelC 160]

Yes, Mike, we need to be concerned with the liens on a property that we're considering doing a CA on. We can't knowingly set up a deal with a $250K purchase price when the mortgage on the property is $300K. What happens when the t/b decides to exercise their option, only to find this is the case? I'm guessing lawsuit, and even though you assigned the deal you can expect some blowback coming your way.

[joethegent 0]

On a CA, should we be concerned with whether the L/S is contracting to sell the property for less than what the mortgages, judgments and liens are on the property, and thus possbily putting ourselves in a "delicate" situation with the T/B?

 

Mike,

 

I know I'm a noob on this forum, but I do know that what you have described is a short sale and it would have to be approved by the bank. It is a whole other ball of wax and it is best to just pass on these types of deals. Like Michael said, if your T/B decided to exercise their option and found out that they needed to go through the entire short sale process first (which takes on average between 6-9 months right now) before they could buy the house for the agreed upon price at the beginning of their lease, there would almost definitely be a lawsuit and you would almost definitely be included in it.

[MichaelGibson 0]

On a CA, should we be concerned with whether the L/S is contracting to sell the property for less than what the mortgages, judgments and liens are on the property, and thus possbily putting ourselves in a "delicate" situation with the T/B?

 

Mike,

 

I know I'm a noob on this forum, but I do know that what you have described is a short sale and it would have to be approved by the bank. It is a whole other ball of wax and it is best to just pass on these types of deals. Like Michael said, if your T/B decided to exercise their option and found out that they needed to go through the entire short sale process first (which takes on average between 6-9 months right now) before they could buy the house for the agreed upon price at the beginning of their lease, there would almost definitely be a lawsuit and you would almost definitely be included in it.

I'm really not talking about a short sale at all. My question was simply, when I do a CA, what duty do I have, if any, to the buyer to personally check the status of mortgages and/or judgments, liens, etc., that could affect the passing of title, should they choose to exercise their option to buy. Of course, there's language in the paperwork that tells them they have the right to contact an attorney, etc.

 

The strategy I use is to put a property under a pure option, as described in the NI manual. I then market for a T/B and present the offer to the L/S with the benefits of a LO. If the L/S wants to LO the property, since I have a principal interest in the property, I will prepare the paperwork for the LO transaction (with the proper releases for preparing the paperwork) and then release my option upon payment by the T/B. That way, my name is not on any of the LO paperwork between the L/S and T/B.