equity in short sales?

i have a property im looking to purchase. i’ve been told two different things. purchase price is 220k, property appraised for 315k. isnt this the equity? i was told that there isn’t any equity in this property because it is a short sale. is that the case?

Who did the appraisal? Is this a current appraisal?
If it is a short sale, the bank would not discount below the appraisal amount that the bank did, unless the loan balance is less than the appraisal, and if the seller is in default on the loan the sale would be still considered a type of short sale if handled in the loss mitigation department.
I have had short sales where I actually paid more than the loan balance (great properties!) and the deal was still treated as a short sale, even if technically it was not.
It sounds confusing, doesn’t it? :biggrin

There are properties with equity where home owners are behind on payments.

The best strategy on these is to take the deal over sub2 and owner finance it out. You might need to bring in a private money lender to catch up the payments.

I can further assist you if you need help with this.

Also try to look for an agent or a broker that specializes in short sales and experienced in negotiating will help assure a smooth transaction with the bank.

Find a few real investors and see what they would be willing to pay as well as what the comparable sales are in that area. Currently, over 50% of property sales are distress sales so often the appraisal means nothing because you could never realistically get that. The real key is in knowing how to persuade the BPO agent or the appraiser because the bank will see that as a virtual “iron-clad stamp”. Once they over-appraise it, equity goes bye bye for you.

All in all, be sure you’re working with real equity for where the market is actually at and you’ll be fine.

Persuasion of the BPO is out the window with some loans with PMIs because BPO agents are only allowed to use comps sold at the retail level. No Short Sales or REOs. Kinda sucks…