I have just started doing short sales , I’m trying to make my first offer to the bank .
The is house is worth 180 k to 190 k. (good condition) they owe 145 k on the first mortgage and 25 k on the second, should I start with 95 k?
Thank you so much in advance for taking your time and helping me out.
1st of all, assume the house is worth $180K. I assume that you’ve gotten comparables to justify what the house is worth. Also assume that you will discount the 2nd down to $2k max.
Are there any repairs that need to be done to the house? What is your exit strategy? Do you want to fix & flip yourself? Or do you want to double close to an end investor?
So you need to take all those things into account. I would say that the most you should offer is $145K x .90 = $130.5K - repairs. So you should go way below that on your 1st offer.
The house was built 2003. 1814.0 sq.ft (4/2 B), and I only have to change the carpet & painting . I think double closing whould be my best option!
thank you
Double closing. Hum!! Sounds easy.
How are you planning on doing this double close?
What kind of documents have you used to submit the offer? Land trust, option agreement, etc?
How are you funding the front end of the double close?
Where are you going to find the back end buyer?
How are you going to convey title to him and do you have an equitable interest to do so?
Is there going to be a seasoning issue for the end buyer?
At what point are you going to spend your own money on the carpet, paint and other stuff which I can almost guarantee you there is some?
Just wondering.
Ok, in response to marketingmaster, I’m assuming that you’ve gotten a short sale package from the bank, and that you will be submitting a purchase contract (containing your offer) as part of that package.
With a double-close, I’m assuming you have a buyer’s list. If you don’t, let me cut to the chase & help you out. For short sales, I’ve found that the best place to develop a buyer’s list is from people who buy houses at the foreclosure auction/sheriff sales. Those who do so pay in cash, and you shouldn’t have to worry about seasoning issues.
Ok, now to answer your question. Cosmetics (paint & carpet) should cost no more than $10K (I’m being conservative - even if you’re in an expensive part of the country). So ask yourself, how much do you want to make? Let’s say you offer $100K and double close it for $120K. Will the bank go for that? I don’t know. But I recommend you give yourself so negotiating room.
Of course, you need to be at the house to influence the BPO, i.e., get it as low as possible. But it looks like where your $ will be made is by making sure that the 2nd only gets no more than $2k. So your negotiations will only be with the 1st.
thank you so much for your time and your advice