Is it conceivable that you could get an appraisal on this property at say, $ 250K. Of course this needs to be a full-blown appr, by a certified, licensed appraiser. If you had such an appraisal in hand, you could structure a purchase contract with the Seller for say, $ 225K, which is appx 90% of the appraisal price. Upon doing so, you could request that IRS remove the lien from the property, granting a partial release as to the real estate, and thereby allowing you to transfer the property free of the lien. This generally takes some time, in the range of 30 to 60 days. The whole key is to be abel to demonstrate to the IRS that there is NO equity in the house that will allow them to be paid off. They will generally approve such transactions where the selling price is greater than 80% of the appraisal.
Whether or not you can get your seller to go along with this scenario is something that you will have to determine. This strategy leaves them still owing the taxes to IRS, and it only releases the security interest, or lien upon the real property, so that it can transfer with clear title. IRS’s position is that it’s function is not to force people into a foreclosure, that could otherwise sell their property, had it not been for the lien. If a foreclosure ensues, it is unlikely that IRS would be paid anyway, so they are not really dluting themselves much anyway.
The key here is a systematic approach to the IRS, with proper documentation, and calmly requesting that they comply with your requests. You will find them quite cooperative, when your requests are within their perameters of what they can and will do.
Good Deal…1st Large one, need help - Posted by Mike (MI)
Posted by Mike (MI) on August 30, 2003 at 07:27:24:
Hello all! First let me say that I just completed a Sandwich L/O deal yesterday (my first one) and I stand to make ~30K total on the deal. It will actually cashflow $425/mo for 24 months! I have done sub2 and short sales, but this is my first sandwich, and I filled it in 1 1/2 weeks!
OK, now on to the large deal (for me anyway):
Market value ~290-300K
PITI $2100
1st Lien 200K
2nd Lien 25K
IRS Lien 18K
1 month behind in payments
I am pretty sure that I can get the owners to deed me the house because the husband lost his job and they can no longer make payments. They do not want a foreclosure on their record. It is listed with a realtor right now for $289K and it has 1 month left on the listing agreement.
I am looking for exit strategies. Has anyone out there dealt with IRS tax liens before? How successful were you with getting them to accept less? If I take it sub2, I can just leave it sit there, right? (penalties and Interest will accrue)
I don’t want to be stuck with the $2100/mo payment and not be able to fill it. It is not yet in default, so negotiating a payoff on the 2nd and the IRS lien would have to wait until NOD is filed.
Please let me know if you have a creative way (or even not so creative) to handle this house. There are a ton of these types of properties where I live, so it is not out of reach price wise.
Thanks in advance,
Mike
I’m not clear on your plan. Hold as a rental? Resell right away? Do some sort of lease-option?
Or were you trying to get me to come up with a plan for you when you talk about “I am looking for exit strategies.”?
It sounds to me like it may not be worth the FMV you indicate, as it has been listed for a couple of months at the low end of that range and not sold. Thus, to buy and resell does not sound very exciting.
It is probably too high priced to provide positive cash flow as a rental. In general, low priced properties are suitable for renting, not high priced properties. So that does not look good to me.
Possibly you could go the lease-option route. I worry that the price may be too high for this to work also. The issue of low ratio of rents to value of property comes up here too, as you are really doing a rental, and hoping for a premium rent because of the option and the ease of getting into ownership. It seems to me that you have to look at the market rent for the property, add about 8-10% for a lease-option set-up then see if that will make sense given the payments and other expenses.
Good Investing**************Ron Starr*************