I am trying to invest in a property. It is a 4 bedroom, 2 bath townhome. The appraisal value without looking at the property was 65,000. The owner is going to offer a short sale to the bank before foreclosure in the amount of 40,000 on my behalf. Her payoff is roughly 49,000.
I am really wanting this property but these are the problems. I would like to get a loan that I can get a loan for more than the price I am offering to the bank to pay for closing, repairs, and some of my smaller debt. Thr realtor I am talking to does not feel that I would be able to do this unless I get a loan for 49,000 and maybe go to 50,000. How do I do this? How to you make a profit at closing? I NEED HELP!!! And do you think this is a deal. I could probably rent from 800-1300 a month.
tarmstro,
Short sales are my expertise! Get written authorization from the seller, and do the negotiating with the bank yourself. If the value is at $65k, you will need to offer the bank about $35k-$40k minus the cost of repairs. If your value is at $65k, trust me, the banks value for the same property is probably at $58,500.
Thanks, I really need you to explain to me this process. How do I get the extra money. You said that I need to negotiate with the bank which I have no problem doing, but when I get the loan how will I keep the extra money from the bank, so they will not want to get the full price of the property? Won’t they see the loan check? Please explain this to me so that I can make a good 1st time buy. Thanks again
Look pal, this is how this is going to go down. You’re going to call the bank and get a contact in the loss mitigation department (make sure your contact is not just some collections rep). Then you’re going to fax the bank the letter of authorization with the seller, your sales contract signed by the seller for $35k, the borrower’s financials (expenses and income, and paystubs only), a hardship letter from the seller, and an estimated net sheet (showing the seller is going to net zero). Call to make sure they received the package after faxing, if possible get your loss mitigator’s email address and send it that way. Wait a couple of days, if you don’t hear anything call back. They may have to order a BPO or an appraisal, you want to be the contact for that so you can influence the value. When they come to do the value, you have your sales comps in hand ready to show why you think the value justifies your offer.
Remember, not every shortsale is guaranteed. That’s why you have to have a lot of deals in the hopper.
Thanks,