Nice home FMV $ 155k
1st position $ 120K
2nd position $ 50K
First position has started the foreclosure process. 2nd has not begun.
I am thinking about going in on the first at $90K and the second at $5K.
Thoughts or comments are welcomed.
Forget the second. Low ball the first. Make the offer.
Any rehab to be done? Any other liens?
Go 80 on the first and work from there.
Offer the 2nd no more than 1K. They will get NOTHING if the 1st lender forecloses and they don’t redeem. If you can go up to $5K that’s great, it’s wiggle room to move and negotiate with. I’d agree to start the 1st at 80.
Before you put a number down, think
WHAT IS THE ESTIMATED PBO???
From there the bank, upon the first offer wants to net 85% of the BPO. If you guys do not agree on a price then, I suggest you wait until the FC sale.
In the mean time (before they send the BPO out there), get ALL your documents prepared. including the REO spreadsheet. (this basically shows the bank YOU KNOW how much they are going to lose) this is a VERY important piece of evidence supporting your offer. Once you determine how much the bank is going to lose. Offer them a loss of a few more (2k,3k,4k,5k), that way they know where you came up with your offer. Based upon your REO spreadsheet.
ask yourself this…
Is the bank going to except my first offer? The answer is no, so wouldn’t it be nice to start low and work your way up. (the low offer is to save you money, and time say the BPO comes in lower than expected)
once they have all your documents its a waiting game UNTIL… they send the BPO out there. I cannot express enough in words how important this is. YOU MUST, I MEAN MUST INFLUENCE THIS BROKER.
What does this mean? This means you must ask the bank who the broker is. Call them and find out when they will be sent out there. You MUST meet the broker at the property the day he or she goes. Your goal is to drive is price down. Show him defects in the property, bring comps in hand to give to him, bring your contractor signed “fair estimate”.
From this point on in the deal, is the make or break point. If the BPO tells the bank 145,000 (his “as is” price) x .85 (what the bank WILL want to NET)= 123,250.00 (this is around what you can expect the bank to net) AFTER THE BPO!!!
This is the whole deal, most new investors to this have not yet understood this either costs them all there time and effort in the deal. OR It can save them all the time and effort if you win the BPO’S opinion.
VERY IMPORTANT INFORMATION:
If upon the banks counter you guys cannot wait agree upon a price…
ask yourself this
Is the auction 2 or 3 weeks away? if no, then wait until then and offer again. the bank will most likely come down lol.
Was the BPO, a fair estimate? If no, I may suggest getting a FULL appraisial on the property. From (your friendly appraiser)
If you then cannot still agree upon a price then its the banks loss not yours!!! Move on to the other 2,000.00 foreclosures or so per month. lol
good luck!!!