So I found a property that I would like to ss. I took a look at the property and it has minimal damage… I would estimate repairs to be about $10,000 that is for repairs and to update property… currently property is listed on MLS at $260, my offer to the realtor is $170, when i told her my offer she said the bank would not accept… I told her that is my beginning offer and she had to present… the ARV is aprx $275. this is my first short sale, is this a good starting point for an offer, now that I have made an offer, how much should I put into escrow, what type of contingecies should I put on contract that allows me flexibility, realtor mention putting $500 in escrow, is this a fair amt, need some advise, what are my next steps,I have a retail buyer lined up, how will I be able to do this, I dont think I can assign the contract, so what is the most efficient and cost afective wa to pass this onto my buyer. how would you experience investors advise in this process, the home is on the mls, my understanding from the realtor is that the bank will allow a short sale… fellow investors, need your advise as I try to venture into my first ss…
Is your end buyer an investor who will purchase for cash? If he is an end buyer that is going to have to finance the property you will have some problems. You do not have an equitable interest i the property and therefore the buyers will have trouble financing it based on a contract with you.
If it is a cash investor you can will want to do a simultaneous close so that he does not see how much you are making. With a cash investor you can do a dry close if you can find a title company that will do that type of transaction for you.
You could possibly get away with an assignable contract if the bank that is doing the short sale does not pick up on it but then you will have to have your investor buyer agree to pay an assignment fee.
Now lets deal with your other questions. Your deposit should be minimal until such time as the bank has agreed to the short sale price that is acceptable to you. You should include a contingency that the deposit will be brought up to an acceptable amount (what ever that is) within 5 days of the effective date of the contract (the date that you and the bank agree to a price).
Your offer of $170K sounds low but it all depends on the BPO (Brokers Price Opinion). If the house is in good shape and not a disaster banks usually are about 70 - 90% of BPO. Again alot depends on the mortgage company with the loan.
The other problem you have is the Realtor. If they are not well versed in doing short sales you have a problem. I never let the Realtor administer the short sale. I let them get the info from the seller then I package and submit it to make sure the bank receives a full package. If the Realtor is versed in short sales and you are not you will have to put yourself in their hands and hope for the best. Good luck.
My company is making a great business of outsourcing short sales for Realtors in Florida and we are able to take a nice chuck out of the middle of a lot of deals but the technology we use is extremely complicated and technical and really not suitable for forum discussions.
Hope this helped a little. Short sales sound like good deals but are not as easy as some make them out to be.
Hey Dick, I do work in FL, too. Where can I find out more info about your company? You can email me at pking@concordinvestmentsinc.com. Thanks…
You can view my profile and my contact info there. Drop me a line and I will be glad to discuss whatever you want to know.