Crazy Option Deal – Plan B

1 Comment
Topics: Options

A motivated seller found my web site by searching the internet for a way to sell their house fast.  Their house was headed to foreclosure.  Their asking price was well below market if I could really close in 7 days.  Remember, in Texas once the Notice of Default is filed the house is sold to the highest bidder 3 weeks later on the first Tuesday of every month.

I told them I would need to do some research and could call back in the afternoon to let them know what I could do.  I pulled up a picture of the house on Google Maps and also looked at neighboring properties online.  I checked the comps using Win2Data.   I checked to see how many other houses were for sale or rent in their zip code.

When I called back I told them there were a couple of different ways I could solve their problem and I’d like to come over to talk to them about their options.  It is always better to discuss offers in person.

When a motivated seller calls, the last thing you want to do is jump in the car and rush over to their house until you have done some preliminary research to determine if there is actually a potential opportunity there.  Once you know there is an opportunity, you want to get to the house as fast as possible because they are probably calling other investors too.  When you do go to the seller’s house, you need to go prepared to sign a contract on the spot.  Take all documents you will need with you because you may not get a second chance.

At the property I discovered that the husband was a bail bondsman who had not worked in 3 or 4 months because his wife had cancer and he was taking care of her.  She was in remission but the long term prognosis was not good.

They had owned the house for a long time and raised 4 children there.  They had refinanced 10 years ago to pull out cash.  They were $6500 behind on payments.

I made two offers, one was for cash.  The other offer was for $10,000 and take over payments.  With either offer, I’d pay all closing costs.  They liked the last offer because it would give them more cash.  Either offer left me a substantial equity position plus I would be able to get $250 – $300 per month in cash flow with the subject-to offer.

We signed a contract.  Then the wife started crying. Then they husband had tears in his eyes.  I said listen folks, if you do not really want to sell your house, I sure do not want to buy it.  Let’s come up with a different way to solve this problem so you can stay in your house.

They had a 32’ Southwind RV parked out front with a faded For Sale sign.  I asked how much they wanted.  $6,500 – just enough to cure the default.  So, I wrote an option to buy the RV for $6500 provided that I could find another buyer within a week.  I was tempted to just buy the RV.

I made a few phone calls to RV dealers and found one who was interested.  I got a friend to drive the RV to the dealership.  Even though I like driving big trucks, driving an RV was out of my comfort zone.  The dealership offered $14,000 cash on the spot.

It was the day before the foreclosure.  I delivered a check for $6500 to the court house steps to cure the default and save the seller’s home from foreclosure.

The seller’s got to keep their home which they loved.  I made a profit by selling the RV (and gave the sellers some extra cash too).  Someone got a great RV. I’m sure the RV dealer made a profit when they resold the RV too.  The lender has a performing note again.  Everyone wins.

Always remember that our job is to solve real estate problems.

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1 Comment on “Crazy Option Deal – Plan B”

  1. Wow, I would have loved to be the one riding in on a white horse to save someone’s house!

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