First off, I’m doing a short sale with an out of state owner.
The owner’s daughter lived in the house and they made 3 major mistakes.
The daughter moved out of the house, so the house is empty.( Some how the bank found out that they moved out of the house and they sent someone to change the locks).
The owner’s delayed sending me some very important paper work (papers that I had to send in with the short sale packet, we lost 3 weeks).
The owner’s did not show up to court to answer the complaint from the bank, so the judge granted the bank a sale in 30 days (which is now 2 weeks away).
I sent the bank an offer through a short sales company that works for me.
At first the investor & mortgage company said that the offer looked good, but that they wanted to order a BPO first.
They just received the BPO back and now they are telling me that they will not except a short sale, they want the full amount due on the 1st mort. The second mortgage has already approved my offer (of course). The 1st mort co. said that the BPO came back over the amount the owner’s owe on the loan.
They told me that they will not stop the sale unless I offer them the full amount on the 1st.
I have tried to stress to them the fact that the housing market is very slow in this state also $15,000 worth of work that needs to get done.
I need some advice as to how I might be able to stop or postpone the sale on the property or maybe another angle I might be able to get this house.
At this point, I know that you shoud not get attached to the house or the owner’s, but I feel so bad for this family and they are counting on me to help them. I also know that I can’t help them and hurt myself. I want this to be a happy ending for all of us.
Any information you can give me will be greatly appreciated.
I am assuming that the amount owed on the first is more than the bank will reasonably get at auction. Is that fair?
Assuming that it is, have you tried to itemize ALL legitimate costs associated with foreclosure, taking over the porperty, making nessesary repairs and then selling it on the market as REO? It might be a good excersize for justify your offer.
Just few things to think about:
Opportunity cost to the bank of not lending your offered amount at, say, 6% for average DOM + time for repairs supported by your estimate.
Specific selling costs (commissions of course, advertising, whatever)
Another avenue: ask the second bank to convince the first if you are willing to give up some of your profit. In other words, short second at 90% instead of 100% but if they will be able to convince the first to do the deal. I actually do not know if this is something investors or banks accept, but might be worth a try. Of course, the payment to the second will ultimately come from your profit, but it’s better to do a less lucrative deal than none IMO.
I hope this helps! Would love to hear what happenned!
Lenders get property inspections on their collateral houses when payments are late and certainly when it is in pre-foreclosure. When their property report said the house was vacant, they made arrangements to secure the property. The home owner has full legal rights to change the locks back, or you could do it with the home owner’s permission. It is stil the HO’s house until the sale.
I discussed these issues you mention 100k/month regarding the property needing work, the cost to the bank if they went further with the foreclosure, slow sales etc.
This is my situation.
The 2nd has approved my offer to them for $1000.
The1st did a BPO and the value came back at $415K, more than the 1st & 2nd put together. They told me that they are willing to take a risk and foreclose on the property, because they feel they can recover all their money back if not a little more. So they told me yesterday that they would give me the house for the $326K and they took away all the attorney fees.
I was upset about it, but I took their offer and told them that I wanted them to pay my closing cost, which they said okay.
One of your mistakes was not meeting the BPO at the property. You MUST be there when he shows up and point things out. Since you didn’t mention it I’m assuming you didn’t. That will cost you. The bank totally relies on the BPO no matter what you say to them.
About the only thing you can do now is get some comps of the house and request a 2nd BPO stating that the initial BPO was out in left field cause NO WAY that house would sell for that price in this market with $20k in repairs needed. And if they agree to set up another BPO, SHOW UP and be there and walk the BPO dude around and point out deficiencies and non-chalontly tell him where you need this BPO to come out at.
If you eventually do enough short sales in a certain area you’ll find that when a lender requests a BPO the same person shows up to do it so it’s in your best interest to develop a relationship with them and you’ll get what you want in time.
But just remember next time - It’s to your advantage to ALWAYS so up at the house when the bank orders a BPO from now on. Make sure you stress to the bank that you are the point of contact for the distressed homeowner who is to distraught to handle this situation so all contact passes through you and you want know when the BPO rep calls to set up an informal appraisal for the bank so you can be there.
Actually, I was there for the BPO. The guy was not friendly at all. I tried to connect with him, but he was not trying to talk much to me. I pointed out every single thing and I could tell that he was getting frustrated with me.
Maybe I’ll try to order another one.
Thanks!
If the second does not know that the house is appraised so high and the first is willing to take a chance why not buy the mortgage from the second for the same money. Remember the second is for 65k and you can settle it for 1,000. Why not ask them to buy it so it goes to forclosure and if the first gets the amount over their amount the second gets paid on based on what is left. You could still turn the 1,000 into more.