Posted by Nate(DC) on April 08, 2002 at 11:39:36:
I think you will have a hard time getting the lender to agree to a short sale if the borrower is no longer the owner of the property. The main reason a lender accepts a short sale is the certainty of cash (albeit, less cash then they are owed) NOW vs. the uncertainty of something (maybe some cash, or maybe having to take the property back and try to resell it) later. If the borrower deeds you the house and you make up the back payments, the lender isn’t going to be as interested in a short sale.
I think you’re better off just negotiating the short sale and buying the property outright with hard money. I am not clear why the “time it takes to go through the short sale process is cutting into your profit”. Until the short sale is done, you don’t own the house, so you are not incurring any liabilities. Assuming your short sale price is fixed (say, $60K), it doesn’t matter that the borrower is incurring new arrearages every month, because if the short sale application is approved, you pay the price you negotiated, nothing more.