How a creative real estate solution helped a military veteran to avoid foreclosure and remain in his home while he rebuilt for his future
Location: Meridian, ID
Property Details: 2022 build, 4 bed / 2.5 bath, 1,800 sq ft home
Loan: 3.625% VA loan
Solution: Purchased subject to on a contract for deed
The Situation
The seller was active military and approaching retirement in the next 3 months. He was already feeling financial pressure in making his mortgage and credit card payments and knew that his income was going to drop considerably once he entered retirement. He had been recently hit with a bunch of non-sufficient funds (NSF) fees and needed a quick creative solution to avoid foreclosure.
The Solution: Subject To Financing & Rent-back
I had sent the seller a letter explaining that I recently helped other veterans with difficult situations and this seller reached out to me to for help. After discussing his particular circumstance, we came to an agreement where I would purchase the property subject to the existing VA loan with a 3.625% rate, pay all of his closing costs, and rent the property back to him at a below market rent for up to 24 months to allow him time to reset, re-evaluate, and rebuild before embarking on his next chapter.
How The Seller Benefited
No Commission Fees: As part of the agreement, I did not charge the seller any real estate commission, which typically range from 5-6% of the sales price.
Covered All Closing Costs: I paid all of the sellers closing costs, which typically range from 1-2% of the sales price, so he didn’t have to pay anything out of pocket to complete the sale.
Quick and Easy Transition: We were able to close in 2 weeks from the mutually executed contract (MEC).
Avoided Foreclosure: The seller was able to avoid foreclosure, which can stay on your credit report for up to 7 years from the date of the first missed payment that led to the foreclosure. It will affect your ability to rent/buy property in the future and significantly increase your borrowing costs.
Rent Back: Renting the property back to the seller at a below market rate allowed him to reset, re-evaluate, and rebuild without disrupting his current living situation.
The Outcome
In the end, the seller was able to avoid foreclosure and buy time to get his feet back under him while he figures out the next stage of his career.