Posted by housebuyer on November 25, 1999 at 14:03:08:
Jim,
Yes the note CAN be sold at discount. Assuming I am interpreting your numbers correctly, it would take a HUGE discount to move this note. So I guess the answer changes to ?No you really can?t expect this note to sell.? However I have been wrong in the past and I just might be wrong this time.
Might I suggest that you hope on over to the Cash Flow Q & A Forum, you?ll probably get a better answer there.
. This is a skinny deal… Where is your profit?
In a case like you outlined I would not even consider giving the seller all his 12K equity up front.
Think about a L/O or L/P.
Tell us more about the situation. How motivated is this seller? Nail down the numbers on the first mortgage. Call the seller and talk. You don?t have to go through the agent to ask questions.
Cash for the Seller…Or is there? - Posted by Jim LaVerdi
Posted by Jim LaVerdi on November 24, 1999 at 21:23:04:
Here’s a situation that can happen to anyone, “Quite Common”. … Seller needs cash! …If I, or anyone else for that matter were to take title to a property “subject to”, and the seller took back a note for his equity, can he turn around and sell that note for cash at a discount? I know at some point in time the answer is yes, but can he do it immediately? If I haven’t even made a single payment on the note what security will the buyer of the note have in this transaction? He can’t hold a first because the bank has that. This note is already secured by a second but is this enough security for this to take place? This particular house is being sold for $130,000.00 and the sellers equity is $12,000.00 It comps at $136,000.00. Please help, This is a good property but I don’t have the cash they need. Will this work?
Re: Cash for the Seller…Or is there? - Posted by John (WA)
Posted by John (WA) on November 26, 1999 at 10:39:26:
Jim,
There is no deal here if the seller wants (needs) the 12K in cash. Certainly not if the cash has to come from you. You may also want to determine if the seller really “needs” vice wants the cash. I had one similar this a month or so ago. VERY motivated seller who NEEDED cash. But in this case I couldn’t even offer moving money. Property was bad, underlying money was expensive and their perceived equity was inflated. There simply wasn’t anything there, so I passed.
Options:
Have them do a cash back refi. This will get them some of the cash they need. You take over “subject to”.
Offer them some moving money (maybe 2K) and take subject to.
Realize that this house only has equity if they sell FSBO. Realtor commissions would just about wipe out their equity and they would be no better off. You may be the best solution to their problem to come along. Sometimes you have to point out the negative alternatives so they are able to see you as a positive solution.