Everyone,
When you say banks are discounting between 82 to 92% of the BPO. Or what ever the amount may be.
Is that before the closing cost?
Or is that net after the closing cost and realtor fees? Which would be between 6 to 7%.
Or is that net after the closing cost, realtor fees, back interest on loan, taxes and everything else?
Thanks.
It’s the net amount. So if 82% of $100,000 is $82K, then that is the amount of funds the lender expects to receive (after commissions, title fees, etc. are taken out).
rgchamp,
Are you including the back interest that is due on the loan, because this could be a large amount?
When a lender approves a short sale, they are agreeing to discount the amount due and the past due interest, penalties are not added on to the price they accept.
The interest on the loan is irrelevant to you.
The 82% is of the BPO. This has nothing to do with the size of the loan. The BPO has to do with market value.
If banks only takke 82% of bpo why do investors ask 65%? Some nust take them. What about hud foreclosures, do they take less than 82% normally? or va. iI am curious as how low some of you investors have ss or bought a reo for. Thanks for examples. :deal
Yes they do if the repairs come in high, and you can put together a great argument and case as to why you need the house for that price. This is not that hard…this is why it is critical to influence the BPO down as low as possible, by meeting the agent or appraiser at the subject and talking the property down. This business is about people, so you must be able to effectively communicate. So, the answer is yes the banks do let them go for cheaper. The successful SS investors are great communicaters and know the steps of a well executed short sale. Also, make offers as low as possible and work your way up!
Sure you hear about numbers all over the place. People tell fish stories about 40 cents on the dollar, etc. It all depends on what you are calling “value” and how much you want to fudge. Some people use ARV, BPO, FMV, the original loan value, some old or inflated appraisal to compare their purchase price to.
Why are prices different? RE is not an efficient market and differnet people/companies have different situations, diff cost of funds, diff income, diff risk tolerance, etc. Some are simply smarter than others. Institutions look at their portfolio value or return and not so much at individual homes like an investor would. Tons of reasons for deals to be different.
HUD, FHA, VA have very rigid minimums (82% an 88%). They are on their websites. Banks are less rigid but tend to be in the same range.