The only reason why you as the seller would do this is:
1) the investor will catch you up in payments and so your equity is protected until a further date.
2) The option to repurchase the home after such length of time agreed upon with the investor so basically stay in your home with a rent/buyback option.
this only makes sense to an investor when there is a property with a lot of equity in it. I could probably tell you more if I knew the property but there is equity. You are technically paying the investor and then they are paying down the mortgage.
So that is how the win-win situation is SUPPOSED TO WORK. The investor helps you protect your equity where you would not be able to otherwise in foreclosure and also allow you to stay in the home, and of course the investor keeps a certain % of the equity as profit as part of the deal. If they stop making payments to the mortgage holder which is a possibility they will foreclose on YOU not the investor, but it is not in the investors best interests to do this unless the deal is structured incorrectly or they are just scam artists who try to bleed your equity out and then just leave. This usually happens the most when you as the homeowner are actually not upside down as much as you think you are, and the investor is able to pull out equity and then just leave you high and dry.
There are a couple different ways to approach this, and my best advice is to simply get a 2nd opinion from maybe a Realtor who also works with investors? I fit that bill and would be more than happy to answer your questions, because ultimately it comes down to what is the best strategy for you? The investor is not going to tell you so that is where due diligence comes in.
Attorneys aren't much help in this situation and neither are most realtors as i am reading the comments below. Investors by definition are approaching you to make a profit, and that is why most people will just tell you to do a short sale instead or run, but you CAN'T usually make a profit in a short sale nor stay in your home! If an investor provides this for you then that is where your question becomes a valid one.
At least do a property analysis to figure out your homes value and why the investor is approaching you.
good luck to you!
Don't do anything until you speak with an agent as well as a settlement attorney. If you want this house you need to make sure it's worth comparable to others. This would only tell if this is a good deal or not.
Wish you the best of luck !!!
Depending on your situation you would be better off working a shortsale on your property and allowing us to get a satisfaction from your bank of all debt! What this means is if the bank accepts 100k on your 180k note and gives us a letter of full satisfaction then you owe nothing else. If you dont get this letter of satisfaction then the bank can come after you for a deficiecy judgement. The bank will also try and just give you a lien release on the property which means they will release the lien on the house but will come after you for the remainder of the balance. So be careful most investors will not pursue this type of satisfaction! They do not care about you, They want your property and thats it! It sounds like they are trying to take advantage of you! The best advice I can give you is to contact a realtor, set an appointment and have them explain all of your options. Then choose what best fits your situation. Please feel free to contact me with any further questions.
Thank You and Good Luck,
Eli Givoni, Director
Short Sale Department, LLC
Serving all 50 states
MARS Disclosure for General Commercial Communications
Short Sale Department, LLC is not associated with the government, and our service is not approved by the government or your lender. Even if you accept this offer and use our service, your lender may not agree to change your loan. If you stop paying your mortgage, you could lose your home and damage your credit.
The first thing you should do is to educate yourself at to how much your home will sell for on today's market and if a short sale might be a better option for you.
As an active investor, I can almost assure you that the investor/buyer you're talking with now will NOT want to consider buying your home if you move forward with a short-sale. I don't even bid on those anymore because there are simply too many motivated sellers out there and dealing with uncooperative, arrogant note holders is not on my list of fun things to do. IF done properly and legally, selling to an investor may indeed be the best route to keeping you creditworthy and able to move on.
If an investor is willing to give you $100K cash, you have to ask yourself what the chances are that he/she will stop paying you or the underlying lender. My guess is that it will be pretty small, but as long as your transfer paperwork is properly drafted you can keep a right to foreclose on the investor should he/she not keep up his/her end of the bargain. In fact, you would almost hope you could foreclose on the investor for non-payment because he/she will have already paid the majority of your note in advance and once you get the house back you would then be able to sell to a third party who was able to get an institutional loan.
What that means is that if you lose your house through a Shortsale or a Foreclosure, you will not owe your Lender for the difference. Minnesota protects you.
If you choose to go through with a Short Sale, (to that Investor, for example);
* you will not hurt your credit score as badly
* you will temporarily halt the Foreclosure
* you will have some time until you move
There are other possibilities; please contact a Realtor for more information.
Good luck and may God bless
There are unscrupulous people out there who will try to talk unsuspecting sellers to do just that. But it is easy enough to do a short sale instead, if you can no longer pay your mortgage.
First you must list the property with a Realtor - preferable one who is experienced in your area. He/she will explain all the steps of a short sale and gather all the paperwork the bank requires. Once you find a buyer/investor for the property, your Realtor will present the contract and supporting documentation to your lender. Your lender will decide whether or not to excuse you from the debt, based on all of your documentation.
I would tell the investor who offered to pay you $100,000 to make the offer to your Realtor after it is listed for sale, as required by the bank.