O.K. For starters, you just might a have a deal. You won’t really know for sure until you get further along in this thing.
On the one hand, you might be able to put a good chunk of change in your pocket & help these people out if you persist in this deal.
On the one hand, you might look at the work involved in this type of situation and say – too much work & hassle for a paycheck that may or may not happen. I’ll get into what’s going to have to happen for that to come true in a just a moment.
There is an inner game and an outer game to doing any short sale. The inner game is a balance of your desire to help these people out, and to make a profit from the situation. If you don’t have a good feeling about making money from this situation, you probably won’t be successful. Know that you ARE there to help them out. If you don’t help them, they will either loose the house take a bigger hit, or some scam artist is going to get ahold of them.
The outer game is all the steps involved in walking them through the short sale.
My advice to you in this situation is to take it as far as you can on as little actual work on your part as possible. What you’ll find is that a short sale can take a ton of time and still not go anywhere.
Your first step will be to start working with the lender on putting a short sale together, just like you would any other. Get the authorization to release information. Have them start gathering together their paperwork. Part of this will be to get a contract with the sellers.
At the same time, contact the trustee for the bankruptcy. Let them know you are planning to work with the owners to get the house sold. Verify with the trustee that he or she will release the property from the bankruptcy.
The next step is to find a buyer for the property. Get a contract with the them to buy the property as is.
Once you have a buyer, set up a closing with the title company.
So I would arrange to meet with the sellers and lay out their options. Share with them how you think you can help, and get the short sale started. I think you will find out early on if this going to be nothing but a dead end.
July 6th, 2009 at 5:25 pm
The only thing that will affect a buyer would be if there are any liens other than the mortgage on the property. If the buyer uses a title company to perform the closing all those liens should be cleared and there shouldn’t be any issues.
July 7th, 2009 at 1:59 pm
Well first a ch. 11 is for a business not a individual I believe…now if it affects the investor buying I would say…it depends on were the loan is in process to the BK. If the house is included in the BK and NOT REAFFIRMED and the BK is accepted in the courts then the property becomes property of the BANK who is carrying the mortgage and this could effect the buying investor from buying since he would have to wait on it being assigned to a listing realtor who handles the foreclosed properties for that Bank. Now, on the other hand if the BANK is aware that the borrower is filing ch. 7 they would be more inclined to proceed with a short sale and negotiate a price that might interest the buying investor. This of course would have to happen asap for it doesn’t take long to file a BK.
July 7th, 2009 at 2:02 pm
Nice article. Ch. 7 or 13 normally is handled by a court appointed trustee and the home can be sold after petition is filed and ruling made on debts. But here is the deal, chapter 11 bk does have different guidelines, so first off, that needs to be clarified. If indeed the home is in BK7 or 13 workout packet for shortsale, can be introduced to the trustee and neq. can start if they know upfront. Short sale , ya, but what about junior leins, that would hold this thing up. Unless the jr. lien is the lien foreclosing. Interesting , keep us updated.
July 7th, 2009 at 2:03 pm
If the shortsale has not been approved yet this may cause a problem. When a Lender is approving a shortsale and a seller files bankrputcy it brings the shortsale to a halt until the bankruptcy shows a release which is normally 3 months. This protects the Lender because they just want to make sure that if they accept a shorted offer, they want to make sure they actually get their money.
July 7th, 2009 at 2:09 pm
In most cases, the sale would not complete until they are out of BK, unless the judge allows it. Sometimes they will. The court would have to be petitioned to ask for the sale to continue while they are in the BK.
Of course, any liens against the house would have to be satisfied in the sale. So, yes, they should run a title report to be sure what liens are showing up.