I’ve heard rumors from some local RE-Investors in my area that lenders are not wanting to work with them anymore on short sales. Is anyone else seeing anything like this? Or are these scare tactics since I’m a noob ?
thanks,
Q
TOTAL MYTH!
It’s about the math. Good, experienced realtors know how to submit the calculations necessary to satisfy the lender’s bottom line - which is to make most money possible in the disposition of a distressed property. If the calculation show that your buyer’s bid will net them even $1 more than a foreclosure, they cannot refuse 9or their audtiors will have their heads.)
The only reason that realtors are avoiding short sale listings is that most don’t know how to do it properly and are getting rejected by lenders. Short sales are a fantastic way to get in on an investment - many short sales can be had for less than the REO on the same block.
These days, the short sale opportunties are from properties with no equity. I don’t know about other RE-investors, but my market is still in flux and probably declining. I won’t pay 85% of the loan amount in a short sale if the property might lose 10 or 15% next year when real estate hits a bottom in my market.
I am offering 35 to 50 cents on the dollar and the lenders are balking. They are relying on comparables from 6 to 12 months ago without taking our declining market into account. I am willing to buy at 85% of next years price, but not 85% of last years price. The lenders don’t see my point of view.
If you dont buy at less than 50 cents then youre not doing your job… We must convince the lender that our price is their best option.
Here in Michigan, I have students that are total newbies that are getting 50% off on short sale deals in suburbs all day long. Thats really the norm.
A lot of it has to do with your short sale package and how your closing (cash or financing) and how how soon you can close.
In Michigan if you can close fast, you’ll get a crazy discount (better than 50% off) with no rehab needed at all.
I always tell Loss Mitigation officers that I have a certain amount of money or a certain amount for a line of credit, and I have a few other deals I’m looking at. Its works most of the time because they know somebody is going to get my money and they’d like it to be them, even when they have to take a big discount.
But the Short Sale package is very important also
Hi–
I have a handful of properties, most of which are worth a bit under amount owed, therefore with holding, selling, being vacant, etc will cost a bunch more by the time I’m through. I wanted to be out of them all last year, but just didn’t happen, esp with the mortgage mess.
I was referred to a group that does what seems like a short sale, by negotiating with lenders, THEN transferring title, and liquidating, apparently in 90 days. They want NO delinquency, little or no repairs, and say there will be NO credit impact, and no hardship case to be made.
Any thoughts??? I need some real help…!!!
I hope you can give good feedback real soon!!
Thanks!
SP
The group you describe sounds like a classic bird dog operation. It’s great if they can liquidate your properties in 90 days and you will be out of them. Try them on one property and see how they do.
What area are you in? Are you sure you can’t rent the properties to mitigate some of the holding costs? If you have equity and can afford to hold and rent, you should do the numbers to see if you can do it. As you know, RE always comes back and you may have a great portfolio of homes with equity ready to go when the market recovers. Something to consider.
Thanks for the replies,
Richard from Michigan, what would it take to get some help with my short sale package? :biggrin
Q