Posted by Gerald-DC on March 05, 2002 at 15:25:52:
If the FMV is 150 and the mtg is 138,000 and there is another 10K in arrears, I don’t see how you can sell this property and make money now unless you get an assignment for a few thousand dollars. Your seller would have to bring all of that 4K to the closing.
Another option is to negoiate with the bank and try to do a short sale.
If there was more spread here, you may have been able to get the seller to give you a note for your profit. That is, have the seller give you a note for say 6 or 7K, record the note and you are now a second mortgage holder. Then, at settlement, you would get paid after the first mortgage has been paid.
Obviously, the second note scenario requires a great deal of trust between you and the seller, but it can work because I did it on a property that like yours, started out as a lease/option but turned into a rehab.
After the seller gave me the note, I recorded it, but I didn’t have him make any payments and I retired the note for the less than the amount due when we settled.