Find 3 very low sold comps and 3 very low active comps, get a high repair estimate and give it to the BPO agent. Depending on the price point, you offer a certain percentage below the lowest comp you have. Around 100k-200k price point, 30 percent or more below. Around 300-400k price point, I would try 20% below. Anything over 500k, you be lucky to get 10% below lowest comp.
If you are in California, let me know and we can work some deals together.
Banks are aware of investors in California trying to double their money on SS and the banks are narrowing the profit gap. We buy SS from Bank of American and Wells Fargo and in the pass we would bring our contractors bid to the banks on the re-hab but now they are going to start on rent ready not re-hab but we can still make $20K to $25K per deal.
@Satarnag - low comps / BPO influence is the best way that I’m aware of.
I’m concerned these days with all the new buy-and-hold rules banks have. Is it worth holding a property for 90 days? Does the FHA 20%-maximum-profit rule kill deals? Is it a requirement to season the deed for at least 90 days or are there lenders that will overlook the seasoning? So many uncertainties…
I’ve definitely heard of $100k short sale margins, esp if there’s 2 or more lien holders since the junior liens will take substantial reductions.
Low comps is the way to go. since I am licensed, I can’t influence the BPO directly, but I do bring to their attention anything wrong with the property and the lowest comps available.
Some bank approval letter state that if the title company is aware of any flips, they must disclose. However, you just use different title companies and you find lenders that do not have a 90 day title seasoning requirement and shove the buyers to that lender.
What do you mean you can’t influence the BPO directly? Aside from low comps and pointing out damages to the property - what other direct influence is there?
Also, the buy-&-resell is already disclosed in the sales contract and to all parties. So if a bank puts it in their approval letter, what are they trying to achieve? And at that point - what good would changing a title company do?
Do you know of FHA lenders that don’t have a 90 seasoning req? I thought it was standard with FHA along with their rule of not being able to sell a property for more than 20% of it’s last sale price.
I can’t bribe the BPO or tell them the number I want (directly).
They are trying to stop a flip. It is impossible for a title company to know the intentions of a buyer. So if you are doing an A to B to C transaction, you involve two different title companies so they can sign off on the approval letter (assuming it has a no flip rule).
Regarding FHA and title seasoning requirement, let me get back to you. I think you might be right.
In life you get what you Negotiate that is the bottom line here. There are always tricks of the trade that one person will figure out while others stumble. It’s just the way it is sometimes! The problem most of the time is that People in general will always try to make things more complicated then what they really need to. This is real life Monopoly here 4 Green Houses and then 1 Red Hotel. Nothing more nothing less in this industry you really need to have an open mind and you will find that you will get more transactions done. Not every deal is a Short Sale and Homeowners just think that is the best option for them simply because they don’t know what all the options are. Sometimes a Loan Modification works out better? Notice I said SOMETIMES not all the time. This is an amazing industry where the sky is truly the limit and you can do whatever you want. I still say Short Sales are a pain… While I have done many and even trained many of Realtors on how to do them with a Major Lender you will notice that if you get 100 people in a room you will get at least 20 different ways of doing a Short Sale from start to finish. I really love the Realtors that just lowball the property and hope they get an offer to see what the bank will take. Be fair comp out right and just like any other Negotiation in life prepare your case and get ready to explain your side of the situation. Now the question here is really how do you you Explain that. And the answer is “It’s all up to you!” it’s your attitude and not your aptitude that will determine your altitude in this industry. I have seen some of the most educated derelicts in Real Estate totally mess up negotiations. Be calm be yourself and mostly have fun!
There is only one way to do a SS is visit the bank with cash in hand and then the bank will take you serious. Over the years I seen where people been in real estate all their life still think they can low ball a SS to get a good deal. We visit at least 4 banks a week in southern California and take the president of the bank out to lunch.