First SS...Opinions Wanted

I’m mostly a land guy, havn’t done a SS on an existing home. I ran into a possible short sale today when I was looking at a listed home.

The house has been listed for over a year, the loan is still current. The owners moved out two months ago (moved out of state), and are open to a short sale now. As of 11/16/06 $72,000 was owed on the loan. The list price has been dropped to under $80,000, no takers. Owners are very eager to get rid of the house.

The house needs about $6,000 - $8,000 in repairs (Basement Waterproofing, Mold, could use new paint & floors) to put it in very good condition. It is located near a college so the renting market is pretty good.

Low end on rents would be $950 a month. I’d owner occupy the house before I rented it out. Taxes are about $3,400/yr.

I’m thinking of putting my offer in at $65,000. Does that seem to high for an initial offer when only $72,000 is owed? I’m worried about losing the deal to another investor if I don’t move fast enough.

Any advice or insight would be appreciated.


Get a bona fide repair estimate from a contractor - make sure it is a high estimate. Also, get comps of foreclosures/distressed properties in the area.

Put a contract on the house based on the info above. Get the owner to sign the authorization to release form & get a SS package from the bank.

As far as the Real Estate Agent is concerned, they should be open to getting a commission from the SS. Of course the worst thing that could happen is the Agent tries to list the property as a SS on the MLS, and the bank decides to evaluate all offers. But there may be ways to get around that.

The bank will not entertain any offers below what is due and owed on the home if the
loan is not in default. Why would they. Tell owners that when or if they get behind, they
should call you to do a possible SS. Until then, your option is to buy the house as low as
you can and have the current owner bring money to the table that is needed to make
this transaction work.

1locator: That is true, unless they have gone through the SS process. Wildride should start the SS process & submit the offer that is below what is owed as part of the SS package to the bank.

Yes,the bank is not gonna do anything until they have missed a payment or 2.Just keep in touch with them,its gonna have to get ugly first.When the bank sees that their fixing to have a foreclosure then they’ll be a little more pressured to take some offers.When they do get behind and you get your contractor estimates and A2r from the homeowners,make sure you meet the BPO when he comes to look at the place.It may even help to e-mail some digital pictures of the repairs.

Thanks for the replies.

I was thinking the same about the bank not entertaining the SS since it’s not in default. I’ve learned that they were late with Decembers payment (paid 5 days ago) and are late on Jan. payment. They don’t have enough money to make any more payments. They filed with HSBC two weeks ago for “Hardship Assitance”, one of the possible outcomes of that on HSBC’s website is a short sale. Thus I believe that is starting the ball rolling on the SS. I retained the selling agent as my buying agent to persuade her from marketing the house anymore, I don’t believe she will.

I am told they already meet the qualifications of HSBC for the SS because the house has been listed on the market for over a year.

I’ve already had the contractor walk the property, his high estimate is $10,000. He said I could do most of the work myself for $3,000 - $4,000.

The owners are in pretty bad shape. I am almost thinking of asking them to somehow come up with $2,000 to pay the loan down and then offering $70,000, that is if the bank takes to long to get back to me. I don’t want to lose this house to some entry level family offering too high.

I put the offer in of $65,000 to the owners today, I got a verbal approval, just waiting for the paperwork to be signed and overnighted.

Let me know what you think.


How many mortgages are on the house?

Make sure you have all the HSBC requirements/paperwork for a short sale & submit it is a package. Also, if mold is a problem, try to get an estimate from a mold remediation contractor. Mold issues tend to scare people. So you might be able to reduce you offer even more.

One Mort. through HSBC, balance around $72,000. The current owners were only in the house for about 2.5 year.

What are the payments? (principal,interest,taxes,insurance).You may can get this Sub2

Whats the benefit of Sub2 if I have the cash and credit to buy the property? I could see if I was trying to flip it, but I want it for a long term rental. (I’m 21 I have a good 30 years until I retire lol). I don’t know much about Sub2.

I’m worried of what agent they will call to do the BPO, most of them in the area have sky high appraisals. On the other hand the mold might scare the BPO to under $65,000?

Also, what stops the agent doing the BPO from telling one of their investors or buddies that a short sale package is going in and that they should try to get the deal?

I guess my biggest dilemia is, do I try to squeeze every penny out of the deal and risk it getting stolen out from under me or do I pay a higher amount and close the deal…obviously thats only a question I can answer. Any input would be appreciated though.

What about putting an option on the house…ex. I pay $300 for the option to purchase the house for $72,000 no matter what other offers come in within the next 3 months. Owners are desperate for cash, the real estate agent is not motivated…maybe it’d work?

Questions Questions


Welif you have cash then go for it,but either doing a sub2 or installment land contract will keep you from tieing all your money up on one deal.If the P.I.T.I. is low enough and you have cash flow on it,then i would just give them 5-10k and take over the house.

Well the offer has been accepted by the owner and their lawyer, at least I have them tied up now.

HSBC got the offer on their table yesterday. Hopefully the mold scares them and they accept the offer in a week, I’ll keep you updated.

In case anyone wanted to know the final outcome.

HSBC has accepted my offer (verbal), should be getting the paperwork on Wed.

I probably could have got it cheaper, they are netting 88.2% (They said they would take anything 82% or above). Shoulda, Coulda, Woulda.

I’m thinking I might be able to save some money if I have HSBC do the financing on the property again. Anyone ever seen that?

Now how can that POSSIBLY be?? EquityHunter said that short sales are impossible and a waste of time!!


Oh no, please don’t start another forum war between EH and everyone else…dear God! lol

Just posting a final update:

I finally received the paperwork from HSBC today, everything has been accepted. We redid the contract four times, it ended up being to my benefit. I was able to lower the price from $65,000 to $63,000 by saying I’d pay for about $500 worth of closing costs. HSBC did not want to put out any money at closing. I also got the closing date pushed back by 32 days, which I wanted.

All in all I found the process very easy, I am actually surprised how easy it was after having read up on short sales. Maybe it was beginners luck.

Thanks for all the feedback!

Wilride- Congrats. I hope it works out for you.

I am working with HSBC right now on a 2nd position. They know, by there own BPO which was less than the payoff amount, they will receive nothing at auction yet they still will not accept my offer. I will detail more after I settle this matter with them of the “under the table deal” the L.M. person verbally offered to me.

Wildride you mentioned having to redo the contract a number of times. What were the revisions you asked for?

send them an offer well below that…

this is a WINNER NO MATTER what. Be patient and resubmit a low ball offer. If it is not excepted then wait until the FC sale date approaches. You could in my opinion get this accepted for 55k!!!