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Mortgage Assignment Case Study ~ Villamoura

I guess we could call this case study the most infamous because it’s the first one where we interviewed the buyers and sellers at the closing. 

We were referred to these sellers through my husband’s sister.  What was great about these sellers is that the husband is studying to be an attorney and he had done some of his own research on owner financing prior to even meeting with us.

So, not only was this a warm referral but after examining selling alternatives on their own, they also agreed with us that owner financing / mortgage assignment was one of the options and alternatives they wanted to pursue.

These sellers were up to date on their mortgage and were not in a financial bind, yet they really wanted to downsize to compensate for other expenses, including their schooling, so they were motivated.

We started marketing their home, and as you saw in the video, we were able to find a buyer within 3 weeks!

The buyer was a Pastor ,who like many self employed individuals, could not prove his income and as a result could not get bank lending.  He had also recently divorced and as a result, had some credit issues that needed time to resolve.

Originally, our buyer had a large down payment but an unexpected business expense came up and so he was going to wait.  However, we thought that these sellers and he may be a good match and may be willing to be flexible enough to make the transaction work and so we showed him the house and he fell in love with it.

So, after some creative number crunching, the buyers and sellers agreed that the Pastor could put down a small initial down payment and pay the remaining down payment over the course of the next 6 months.

Our profit on this deal was just under $12,000 —-> $11,996.00

The important lessons on this deal were:

1.  Flexibility.  This flexibility on the sellers part meant a quicker sale for them. For the buyer, it meant that he could get into a home sooner than he anticipated while still fulfilling his down payment obligations.

2.  Referrals.  This has been another one of the advantages of being in the mortgage assignment business…we are getting a lot of referrals.  We have a solution that no one else is talking about or offering.

Now that it’s becoming more widely known, there are still other investors and realtors who just don’t know how to do it and so we are getting their referrals too.

There are many great things about doing Mortgage Assignments…

—> We are helping sellers who have no other GOOD options and are likely facing foreclosure, this is their BEST alternative.

—-> We are helping buyers become homeowners.

—-> We are providing a solution many investors, realtors and brokers are just learning about and many of them are THRILLED to pass these deals over to you if you can help them!

Mortgage Assignment Case Study – Quail Hollow

This was another one of our very first mortgage assignments and it’s where we started to learn how to close buyers.

The homeowner was listed with a realtor at the time he received our flyer so we had to pass the call off to our investor partner (we are licensed so we can’t talk to any buyers or sellers who are already represented). To add another obstacle, the seller only spoke spanish, so we had to hire an interpreter.

The seller only had 2 weeks left of his listing and he wasn’t keen on firing his realtor. So we decided to wait it out until the listing expired. Once the listing went off the market, we met with him and signed a contract to offer the home as a mortgage assignment.

The great thing about this deal is that the seller was still current on payments. The down side was that he had lost his job so it was getting harder and harder for him to keep on paying the mortgage every month. On top of it, he bought this home for his wife, who just left him, so he was sad to be there and he just wanted to get out.

So we started marketing the home. We had numerous buyers come through because the home was priced right at market value, had a low down payment and monthly payments were under $1000/mth. The problem was that all the buyers who came through the home said it was just too small.

We finally found a buyer who was self employed, had a girlfriend but no other family. This home couldn’t have been too small for him….except he said it was. You see, he had just seen a home the other day that was twice the size, and as a hard working business owner (he owned his own roofing company), he wanted to have a house he could be proud of when he came home after a long day’s work.

I let him bake for a little bit and then called him back and he agreed to come take a look at the property again. I knew this buyer was going to be the best fit for this house due to it’s size. So we went to the house again and started talking.

Yes the home was small…but here were the upsides
Owner finance homes are scarce…
You RARELY are offered an opportunity to buy a home at it’s loan value, especially such a low loan value (approx. $92,000)
You RARELY find a home where you get to take over the EXISTING loan payment with a great interest rate… (approx 6%)
You RARELY find monthly payments under $1000…
This home was being offered at a competitive price, not priced slightly above like most of the other homes…
This could simply be an investment for him that he could refi and rent out later (he had that investor mentality)…
This was plenty big enough for him and his girlfriend and he would not be extending his budget – it was an easy payment to maintain…

Once we really started looking at the big picture, he was ready to go. He pulled out his checkbook and we started signing paperwork.

This buyer took over a loan of $92,083.68
He paid all the closing costs $1818
He paid an assignment fee to my for $6,000

It’s now a year since that mortgage assignment has been done. The buyer ended up moving to Colorado but rented the house out while he is away. All payments are current and the buyer intends to either keep the home as an investment property or sell it when his balloon comes due.

The seller now lives in an apartment, his credit in good shape and he was able to avoid foreclosure. He also found a new job!

Buyer is happy, Seller is happy and my bank account is happy! Win-Win-Win

Q & A

MAPS Questions & Answers: I’ve gotten tons of questions via email and other article posts so I wanted to put them all in one place.  I hope you find these valuable and feel free to post your own questions.  (Click on the “comments” link at the top or bottom of this post and all the posts will open up for you to view.)

Mortgage Assignment Case Study – The Nijmegen Near Catastrophe

One of my first mortgage assignments was a home on Nijmegen. One of my partners at the time had actually got the home under contract. Unfortunately, because we were all so new, the contract wasn’t negotiated very well. The property was already WAY underwater and my partner had to still promise the seller $5,000 cash at closing just to get her to sign on the dotted line. The upside was that this home had loads of upgrades.

There were a few problems with this home. First, the seller was a smoker and despite the new paint job and carpet cleaning, the house still had an odor.

Between the smoke, the inflated price and the need for a buyer to come with such a large down payment in order to pay us and the seller, that property sat there for around 3 months until I got a buyer call from one of my bandit signs.

The buyer I was working with had $7500 cash and was willing to use his $8000 tax credit to cover the rest of a down payment if it was needed. I showed him and his family quite a few homes but in the end, the buyer’s wife really LOVED the Nijmegen home and all the upgrades.

So, the decision was made and we put in an offer. The seller accepted and we set a closing date. This is where the problems started.

The seller was hard to handle and my partner at the time was having a tough time with her. We finally made it to closing and we all walked in and the smoke odor was powerful. This almost shut down the deal entirely.

In the end, we did close the deal that day and here is a breakdown of the funds:
The buyer brought $7800 to closing:
$1800 to closing costs
$2000 to seller
$2000 to my partner
$2000 to me
Then, when the $8000 tax credit came in, the seller, my partner and I each split that with $2800 going to the seller and $2600 going to my partner and $2600 going to me.

Total profit for this mortgage assignment was $4600. (By the way, this happens to be the least amount of money I have ever made on a mortgage assignment)

The lessons learned in this deal were numerous which is why I called it a near catastrophe, but here are the two main things I took away from this deal:

1. Don’t deal with non-motivated sellers (or be willing to patient because the sellers will usually have unreasonable expectations to be able to sell the home quickly). This seller controlled the negotiations because she wasn’t motivated enough. As a result, we had to pay her a large portion of the down payment and we all suffered through her constant changes or whims. (Funny things about your beginning deals is that you put up with a whole lot more than you would normally.)

2.  Learn how to deal with smokers. This deal could have truly ended in a catastrophe because the seller continued to smoke inside before closing.  If your seller is tough to handle like this one, it may be better to just walk away.

Mortgage Assignment Case Study

I wanted to start posting about some of our deals and I thought I would start with a pretty recent deal that we just got under contract on Friday.

This is a seller who was listed on the MLS for 6 months.

This lead was found by Tracee when she was targeting expired listings.  Tracee, (if you don’t know yet), is one of our brand new real estate agents (just a little over a month now) and she is also a new real estate investor.   She wanted to learn both sides of the business and that was one of the reasons she wanted to join our team.

Tracee works a full time job so I was one to go meet the homeowner to get everything signed.

This seller turned out to be one of the toughest deals I’ve had to close yet. I was actually up against a big-time agent here in Austin who also knows owner financing VERY well but he does not know how to do mortgage assignments.

This other agent met with the seller the day prior to my meeting and had a follow up appointment scheduled after my meeting.

The seller was thoroughly impressed with this other agent and she said he was very convincing.

The seller was a bit stand-offish at first and she had every objection imaginable.

In the end, here is what I did well…

1.  I was absolutely 100% honest with her and realistic about the sales price and I told her straight out that I wasn’t going to suggest a sales price that made her feel good just so I could “win” the listing.

2.  I didn’t tell her what she wanted to hear, I told her what she needed to hear.  Believe it or not, that is very refreshing for anyone.  People really do want to hear the truth, even if the truth kinda sucks.

3.  I provided her 4 different options.

4.  I was able answer EVERY objection she had.

5.  I listened to her story and sympathized with her situation.   This is sometimes the hardest thing to do, but if you’ll truly listen to what your clients have to say and make that connection with them, it means the world to the rapport you build with them.

6.  I brought all the paperwork with me and was absolutely prepared to ask her to move forward.

There was probably more to it then just those things but after reading those through, they were truly key components to me walking out the door with a signed deal and her calling the other super star agent to cancel his follow up appointment.

After you read through those items, how hard do they look to you?  Not so hard right?

Tracee went out and marketed for buyers this past weekend and did everything I told her to do….

Here is a picture of the text she sent me on Sunday (I’ll give you a little background about what we were texting about…)

1.  I never go on an appointment until the seller is ready to sign.  So, she had set an appt. for her and I for another deal she has in the works and the top text you’ll see me asking if the prospect is ready to sign, otherwise, I wanted her to make us a phone appointment first so we didn’t waste our time with a trip to the house if they weren’t ready to get started.

2.  Near the bottom is where you’ll see the reason I posted this picture.  She says “My phone is blowing up today on those bandit signs”.

Tracee is a single mom and she has a full time job in health care.  She just got her real estate license and she is a brand new investor.   Despite her being a “newbie” and having a ton of other responsibilities, she has managed within a month to secure 2 MAPS deals….and that doesn’t even factor what she has in the works!

And, on a side note…please forgive any spelling errors.  It’s 1:15am and I’m not proof reading, I’m just gonna submit this post for you to enjoy…  😉   Night night…

UPDATE!!  We got an offer on this home the following Monday night, that’s 4 days after we posted it for sale!!!  I can’t go into any details because we are in negotiations but I’ll keep you updated!