All of the paper work has been signed with the previous owner: Quick-Claim, Power of Attorney…etc
I now own the property and took it over at $47,000 left on the mortgage. $5,800 to bring it current
The house is in bad shape. The appraisal has been ordered and should come in around $130,000 to $145,000 subject to the roof being fixed.
“Now my question is: Can I short sale the $47,000 mortgage to increase my profit (Considering the condition of the house, the area its in, child predators in the area… etc etc etc.) also this is in Florida last year we had 22,000 foreclosures in Broward and 10,000 in Dade. 2007 is supposed to double. “
My current plan is to take money out up front by refinancing 65% - 70% the house.
Then taking money in the backend by selling the house under market value as a handyman special.
If you already own the property and are going to bring the note current, why would the bank accept a short sale? If the note is performing, why would they let you out of it?
I agree with JSstinson. Why couldn’t you catch the note up for $5,800, then flip it as a handyman special for for say $65 or $70K. Then you stand to make at least $10K.
Well you see i dont know about short sales! Thats why i was asking i really would like to learn more about them i have been reading the forums.
By the way (rgchamb) by refinancing I can pull $32,000 out at 65%LTV (after closing cost) that’s a lot more then $10,000. Then quick-claim it over to a handyman or sell it for 10K or 5K more on the back-end.
But I really want to learn how the short sale works and how to present the bank with a short sale package.
Can a short-sale only be used or accepted if the house is over leveraged (meaning more money is owed on it then the true value of the house) or lets say in my scenario of 47,000 in default can be short-saled
THen you shouldnt have brought it current, inform the ho that you were going to talk to the bank about creating a discount for yourself.
You will need to prove it needs a lot of work, use comps to show the curent home prices are lower than the amount owed. Example, i have 1 house, HO refinanced for 175k yet the home prices are 100k. The lender will tak a bath on this deal.
what part of florida are you in. I’m in central east florida
steve
I use Hard-money lenders to buy so I have to stay in a range of 65%
You see my problem comes in with future houses. Buying a house with no money is easy! The hard part comes in after: closing cost, catching up back-payments, accrued interest on back-payments, doc stamps/recording fees, 6months advanced payment to allow time to sell the house, appraisals…etc etc. It really eats up the profits in the front end. .
EXAMPLE:
House is in Foreclosure
100K appraised house 60K is owed on it
Lets say I get the house for 65% of the appraised value! Now that covered old mortgage and the new lender is in first position. Now comes the holding fees/cost of doing business. Houses in the area are selling for 80K to 110K.
Would I be able to negotiate to the bank to lower the 60K 20% to 30% in a market like FLORIDA
Hard to sell a house
Falling prices in real estate
Massive foreclosures in the area 22,000 just in Broward for 2006 and its suppose to double.
Over priced with today’s market and people not being approved to get a loan.
Many more
What I am trying to strategize I guess is how I can cut “The cost of doing business” to where I don’t have to come so far out of my pocket, after acquiring a piece of real estate.
zebold - Most lenders aren’t stupid. If they are servicing a 60K loan on a 100K property they are not going to approve a short sale. The property has to be over-encumbered. And you have to prove it, and prove hardship, etc.
I would love to say this right now…short sales are not crap! IF done right and I mean IF done RIGHT, there is lots of money to make in this aspect of investing. I have been studying for almost two years now. My coach is my brotherinlaw, who has done some and is in the process of doing five right now. I have seen it first hand and I know it works! Lots of money to be made IF done right! The most important thing an investor can do is market market market! My brotherinlaws signs on the highway and postcards have brought him lots and lots of deals! and the signs are still bringing deals as we speak…
My advice to anyone would be to get acourse and do exactly what it says! You alos have to love people and love helping them. Yes youc an make huge amounts of money in this, but the bottom line is people and helping them get out of a very very tough situtation.
anyway just desired to share that!!!Yes its hard work, but its great and rewarding work! Thanks and great deals to all!