In this YouTube discussion, Chris Prefontaine, Avi, and Derek examine how investors should manage lender communications when acquiring properties through subject‑to (sub‑to) transactions. Avi recounts advice from a wholesaler’s transaction coordinator to avoid sending any authorization paperwork to the bank and instead simply change the contact information on the lender’s portal. The participants argue that this approach can create problems later, such as being unable to obtain a payoff or other necessary documents if the investor is not formally authorized. Derek shares a personal experience where lack of proper authorization delayed a payoff, highlighting the need for a valid power of attorney (POA). Chris explains that many banks limit the validity of simple authorization‑to‑release forms to six months or a year, prompting his team to switch to a property‑specific POA on their standard checklist. The conversation underscores the practical risks of minimal paperwork, the benefits of a POA that grants decision‑making authority, and the variability of bank policies. The segment concludes with a brief promotional plug for Smart Real Estate Coach’s resources.
Chapters
I bought sub-to from a wholesaler and I got all the proper documents in terms of talking to the mortgage, etc., authorization to talk to them. I asked the wholesaler's TC about did she send in the paperwork to the mortgage company or am I sending it in? And her answer was, oh, we typically don't send it in. We don't want to create any red flags. Just change the— on the website, you know, the bank portal. Just go in there and change the phone number and change your email.
This is for just your contact info, just some tracking.
Well, contact info. But then like with the bank, they're not going to— I'm not authorized to talk to them. I'm just based upon what her take on how to do it. Was just go in, change your contact info so you're getting the you know the the statements or whatnot. But she suggested not sending an authorization to talk to me.
Why? You're just acting as a management company.
Right. That's yeah. That was my thought as well.
But that's whose advice was the was the opposite of what I just said?
Yes.
Whose advice was it?
The TC for the whole, the transaction coordinator for the wholesaler.
Oh, for the wholesaler. That has this person ever done a sub-to transaction?
I would guess. Yeah. They, they, this wholesaler buys sub-to as well. He's the one who created the, the terms with the seller.
Well, the challenge I, the challenge I have with that, Avi, is someday in the future, It could be as simple as getting a payoff, right, to pay the loan off. And if you, if you're not in the system as authorized to talk, I've had one this last year where my title company, we went round and round with the lender just to get a payoff and we bought it sub-2. And I mean, I went and I had a good relationship with the sellers and, you know, they had to sign more documents at that time. And I had power of attorney, I had everything. But we're just trying to pay the damn bank off. They wouldn't give us a payoff. So if you don't have— if you don't have any authorization to talk to them whatsoever, and let's say that seller now moves or you lose contact with them, you know what?
I have the paperwork. She was just saying hold on to it rather than send it into the—
now send it in.
Send it in. Because if you hold that paperwork for a year or two and now you try and send it in with, you know, it's dated, Right. An old date, they're going to say, nope, we want a new one.
And do you have authorization release or POA?
I think I'd have to check, but I believe I have both.
Because I'd rather— I know what Derek's experience has been. New to us about 3 years ago was in the same state we've done business in, but one of our students— we'd never happened to us— one of our students, the bank said the authorization to release will expire every 6 months. Another one said a year. So that's when we switched the paperwork on the checklist to POA.
Yeah, I use POA.
All right, I'll check.
And again, you never know, right? Because I did— I bet you we did 70 deals in Connecticut before it was Steve Murnick, before Steve had that happen to him. Like, what the heck? What are you talking about? I've done— but there's one bank and they said it was because of Connecticut. I said, it's not Connecticut, it's the bank. So that's why I like POA. Sounds like Derek's the same.
Thank you.
Not sure where to get started? Go to smartrealestatecoach.com/getstarted. Get going for free books, strategy calls, and a whole bunch more. We're going to help you get going the wicked smart way. We've been after this for over a decade doing exactly that. By the way, that discussion there is going to hit every single one of you guys. So that was good.
Well, and to go further with that, Avi, the authorization release that just lets them talk to you. The POA gives you the ability to to actually make decisions. Yeah, right. So you know if you have to talk with The insurance company, the lender, the tax authority, whoever it is, an authorization or release doesn't allow you to do anything other than get information.
Got it. Okay. Thank you.
And the POA is not this broad POA, guys, just so you understand the difference too. It's for that property. So the seller doesn't have to freak out. It's just for that property.
