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Dallas Finally in Escrow… I Think

Dallas Property

Wow… this took a lot of back-n-forth but I finally have a cash buyer for the Angleridge Dallas property. It went into escrow today, but there are still a couple of issues.

I will have to tell you the history on this deal another day – why I bought it, what went wrong, how I tried to sell it, how much friggin money I am going to lose, etc. Don’t worry, all the juicy details will come when I finally close on this thing. For now, just a quick update.

After my round-robin auction failed back in June, I decide to list the property with a local agent. She makes some promises but then all of a sudden drops the listing and refuses to work for me. (The auction and the first agent is also a story for another day).

So then I list with another agent. I already used this agent for the flat-fee listing for the auction. Now, I though, I will hire him to do a standard full-service listing at 6% commission.

I negotiate with this second agent to allow me to continue marketing the property on my own. If I find a buyer then the agent would cancel the listing for $2500. This way, instead of paying 6% commission I would just pay the listing cancellation fee and do the deal directly with my buyer.

So I market the property to my list of investors and also on craigslist. Here is the ad that I used:

Facing Foreclosure on 6 houses, TAKEOVER my payments!

Hello,

I’m a real estate investor. I’ve made some bad moves and got overleverged this year. I’m now stuck with 6 houses in 4 different states. I’m 2 payments behind on all the mortgages. Willing to have you just take over my payments and I deed you the property. I just want some cash for my equity. I’m also open to doing a short-sale. Properties are in Sacramento, Modesto, Utah, New Mexico and Dallas. Here is the local one:

ANGLERIDGE
9524 Angleridge Rd, Dallas, TX 75238
5/4/0car ~2800sf, 7210 sf lot, built 1964
Owe 195k, Worth ~275k = $80k equity or so
PITI: 2,270/mo @14.0% hard money baloons in 9 mo
Vacant, just finished an extensive remodel. Nice property but garage conversion and street noise makes it longer to sell. Good area, good schools, steady market.

-Casey

Here are links to my other properties and my situation:
http://IamFacingForeclosure.com

Keywords: foreclosure, short sale, desperate, motivated, must sell, owner financing, owner finance, seller financing, lease option, rent to own

I get a pretty good response on that ad. As you can see I put all the numbers there – how much I owe, payments, etc. The ad is targeting investors. They just want the numbers. I also included keywords at the bottom so that my ad would be easily searchable.

A wholesaler out of Utah contacts me…

He wants to put the deal under contract and re-market it through his own channels. I am not sure if I want to go that route. This guy wants to tie me up with no deposit for a couple of weeks and then if he can’t find another buyer he would just drop the deal!?

Well, he sounds pretty convincing and I can sense he is a good negotiator. He promises to not tie me up for too long. He also promised to give me 50/50 split of his assignment fee (finder’s fee) – once he sells the deal to another investor. I get a good feeling about him so I decide to give him a shot.

He tries but it doesn’t work. He says the house is too weird. At least that’s what his buyers are telling him. By the way, he is doing the whole thing remotely from Utah. He has never even seen the house. A good wholesaler can do that no problem. Especially if they already have a good buyer’s list. So the problem is the “weird” house.

Backup buyer ready to go…

Even though the wholesaler’s deal falls through, I have another buyer lined up. I’m glad I never stopped marketing. (See, I learned something in my real estate seminars). I accept a back-up offer from a cash buyer from New York City.

Things don’t go too easy though (do they ever in real estate?). This cash buyer and I negotiate back-n-forth for a while.

He first offers to buy the house for the mortgage balance. I say “No! I want a little bit of cash out of this deal”. There is some equity.

Then we talk again and he offers me a much higher amount. I get pretty excited. But then a week later he changes his mind and lowers his offer. Apparently he does some more homework on the deal. His local contact was telling him that he is paying me too much.

Well, I’m a pretty motivated seller so I don’t take offense and take a lower offer. I don’t have many options at this point.

The offer is just a little bit over my pay-off. So I will pay back my hard money lender in full including the back-payments. The buyer will be paying all my closing costs. And there should be there a little bit of room to put some money in my pocket – maybe $2-3K. Ofcourse, considering that I spent over $35K on this deal, I am still losing BIG time. At this point though, I’m happy with whatever I can make to put food on the table.

Sounds good but…

The problem is that the buyer refused to pay for my realtor’s cancellation fee. And I don’t have the $2500. So I talk to the realtor and asked him to see if he would take less. He feels sorry for me and agrees to $650. That is pretty generous of the him. I thank the realtor and call the buyer with the news.

The New York City buyer, however, will not open escrow until the MLS listing is cancelled. He also refuses to pay the agent cancellation fee, even at a discount. I cannot scrape up enough money to give to the realtor upfront, so now I have a problem again.

So back to problem solving mode: I talk to the agent and see if he would put a demand in escrow for his $650 and give me a listing cancellation right away. This way I will fax the cancellation to the buyer and the closing will continue moving forward. The agent would be paid at closing from my my proceeds. (My 2-3K is disappearing rather quickly!)

My agent agreed to the arrangement and tells me today that he will be in contact with the escrow company. Now I’m just waiting for the agent to submit his demand and fax me the cancellation.

More issues…

The New York buyer originally agreed to close in 10 days. Today when I asked him if that’s still possible he said “I am not sure… we have many other closings”. Great! Well… what am I going to do?? I am desperate. So I don’t fight him on it. He will close when he will close. I will just have to be patient, I guess.

Another twist is that back in August 31, I got a letter from the hard money lender’s attorney. It was basically “Pay us now or else – in 30 days we will start foreclosure”. That 30 days ran out October 1. So, I’m not sure what’s going to happen now. I told the buyer about this but he doesn’t seem to be concerned about it.

I need to call the hard money lender and try to stall the foreclosure process. I heard it happens very quick in Texas: 21-30 day or something like that. (Will research and report it later). I heard they call it “Sudden Death”. That’s because it takes 3-4 months in most other states to foreclose.

Here is the letter:

August 31, 2006

RE: Promissory Note dated May 3, 2006 in the principal amount of $194,600.00 payable to the order of XXX Corporation, secured by Deed of Trust recorded as Instrument No. XXXX in the Official Public Records of Dallas County, Texas

Dear Mr. and Ms. Serin:

This letter is to give you notice of default under the reference loan documents. This default consists of failure to pay two installments of principal and interest in the amount of $2,270.33 each and late charges in the amount of $227.03; being the total amount of $4,767.69.

You are notified that if the default is not cured within thirty (30) days after the date of this notice, the lender intends to enforce its rights under the loan documents. Specifically, the lender intends to accelerate the maturity of the note and demand payment for the full unpaid principal balance, together with accrued but unpaid interest and all fees and expenses, as allowed by law. If the amount due is not timely paid the lender intends to foreclose the lien under the loan documents.

You have the right to reinstate the loan after acceleration (as described in Section 19 of the deed of trust) and the right to bring a court action to assert the non-existence of a default or any other defense to acceleration and sale.

Lender shall be entitled to collect all expense incurred in pursuing its remedies under the loan documents including, but not limited to, reasonable attorney’s fees and costs of title evidence.

In accordance with federal and Texas laws regarding fair debt collections, unless you within thirty days after receipt of his notice, dispute the validity of the debt set forth above, or any portion thereof, the indebtedness will be assumed to be valid. If you notify the undersigned in writing within the thirty-day period that the indebtedness, or any portion thereof, is disputed, I will obtain a verification of the indebtedness and will mail that verfication to you. On my receipt of your written request within the thirty-day period, I will forward to you the name and address of the original creditor, if different form the current creditor.

I am attempting to collect this indebtedness, and any information obtained will be used for that purpose. This letter is being sent to your attention in accordance with state and federal law.

If you have any questions, please consult your legal counsel.

Very truly yours,

XXXX

Certified Mail No. XXXX

So I don’t see anywhere that it says the lender FOR SURE will start foreclosure in 30 days. It just says they have the RIGHT to do that. My NY buyer thinks I still have 2 months left. I am not sure about that.

Will be calling the lender tomorrow morning.

In the meantime you can check out the interesting comments for the Dallas property. There is even a comment from somebody who lived in the property at one time a few years ago. Fun stuff!

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