I’m in the middle of negotiating a ss. Here are the numbers:
FMV = $270K in a great market
1st lender bal is $206K plus interest and penalties, totalling $218K. The second mort bal is $52K. The second has verbally offered to detach the loan, and eat $40K. Now the second is trying to back out of that. Of course, if it goes to sale they get wiped out anyway.
The first lender ordered an APPRAISAL, which came in at $260K, and so far, the best offer I received from end buyer was for 235K. My original offer to the lender was $200K. I am debating what offer to come back with, considering $208K, anybody got any ideas? I am basing it on 80% of the appraised value, and try to get the end buyer to go up to $240-245K?? :help
If an appraisal came in at $260k and the loan is only $206k you have no deal with the first. They have ZERO motivation to work a deal, because if it is worth $250k-$260k in a great market then their $206k is perfectly safe and they have no motivation to sell.
The best you can do is work on the 2d and try to cut the best deal you can with them. It would help if the property has repair issues - because then you can take photos for the 2d and make the 2d not want the property, but that is your only realistic possibility. If you can get the end buyer to take $20k. That leaves $226k and with the end buyer at $235 you make $9k (assuming end buyer is paying closing costs).
I fully agree. The first is a lost cause, but you have some ground with the second since the house is headed for foreclosure and if it goes into foreclosure they will most likely be wiped out. Make sure that they do not know about the appraisal (unless of course they order one) and then take pictures of any and all repair issues. Using the right lighting, you can really make the place look a lot worse than it is as well.
I disagree with the first being a lost cause. Is this first appraisal the only appraisal? How accurate is it?
I have found that often the first appraisal can come back at a higher value than what it really is. Have you suggested to the primary that they should order a second appraisal? Generally I am able to get a second appraisal just by asking, and hinting that the first appraiser only hit that high of a mark because they are trying to produce what the bank wants to see rather than what the actual numbers are. After all, a true property value is based on what people will pay for it as much as what an appraiser says it is worth.
I have overcome high appraisals like this by simply showing the lenders the offers I get on the property. If for example, you have multiple offers and the highest is below the appraisal value, it is possible to convince the lender that the current market doesn’t support the ‘old’ comps that were used for the current appraisal value. Questioning the banks appraiser often gets me another chance. If the second appraisal comes back lower than the first, then chances are they will do a third.
Either way, it is very important that you show up to these appraisals. I have noticed with my own deals that when I don’t show up the numbers are always higher than I want. Just by simply being there to talk ‘shop’ with the appraiser you can influence their report. The power of suggestion really is powerful!
Thanks for the suggestions, however,…I suggested another appraisal, got turned down…Then the second got an appraisal, and I think it also came in high (probably used same person!!) Anyway, don’t want to show the other offers, since in their eyes I am the buyer. I am thinking of putting in another offer, about 80% of the appraisal value, what do you think??