Is it just me or does the math work?

If the lenders accept 82% of the BPO after mountains of paperwork from seller and numerous calls, and unknown hours of time, how are we supposed to make money on 83% of the BPO when most of them come in high in the first place?
Any advice? Ive lost about 35 short sales this year so far because the BPO is high or the bank wants 82-88% of BPO. Ive had banks tell me they want more than the entire payoff figure!
Yeah right

Hi again - If the house has mortgage insurance - they probably will deal more because they get money from the MI for the short (a %age). If there isn’t any MI, then they probably want as much as they can get. Plus, if they go to foreclosure, they might get more than you are offering at auction or if they end up with the house (REO) they can list it with a Realtor (I know you aren’t too keen on them these days LOL) and get FMV with a few repairs. It all has to make sense to them. Does that make sense to you?

yes, but how do we make money on 82% spread? unless we L/O

LOL I don’t think the bank cares if you make money. :cry:

Just a thought, look for SS’s that have a low mortgage payoff and a much higher FMV. Then again, the bank just might rather go to foreclosure. But foreclosure costs them money. They just have to weigh the pros and cons and go from there. The ball is is their court - take it or leave I guess.

I haven’t done a SS, but have done tons of research on them. I haven’t run across one that I felt I wanted to invest 3 to 6 month into.

Its all in the BPO numbers.
On a SS, they get inputs from the REO department before accepting
an offer.
When the loan is in foreclosure, they have incurred about
$1500 or so. When they foreclose, it is about $3500. Another 2K.
Now, if the auction is going to take another 2 months to close and
for them to get paid off, then you might be able to use these as
negotiating points as well.

There are a lot of people out there looking for homes. This market
needs to cool even further for the banks to take it easy and let
At times, the numbers will not make sense for a flip. If you get
in with 18% equity, try it as a rental for a while. That will work
over time. But i do know that not all properties are good rentals
and many don’t have the time/stomach for it. A pain.

How do other investors make money on the 82-88% of a BPO? I agree on the rentals, then you have to fund and hold, and pray for good tenant.
Rentals it not my focus, maybe long term but Im into it right now for cash and maybe L/O but long term rentals–don’t know
if it all comes down to the simple math, why does the lender make us do all the paperwork and all?
why not just call bank and get the 82% right up front and prevent months of wasted time…

If you don’t like the percentage of return - pass on it and find one you do like - that simple. There’s tons of deals out there. Why dwell on this?


I hope your numbers are way low because I just sent in a SS offer explaining to them they will have lost $35k+ to foreclose. Here’s how I broke it down. For some reason the lender waited 6 months with no payment($900 per month) to file lis pendens. With late fees this comes to around 7k. The home is in Illinois, a judicial state, so the average time it takes from lis pendens to sale is 7+ months and that’s if all paperwork is done correctly. That brings us up to around 15k. Legal fees for the entire procees I guess would run about 10k total. I base this on the $2900 they spent for two months after filing. This puts us at 25k. My guesstimate is that the soonest they will be able to get the property back would be next Febuary. I forgot to mention the home is vacant so factor in vandalizism and burst water pipes from a midwest winter 3k. Toss in another 2 months on the market and another month to close, 3k holding costs. And this is if all goes well. Were at 31k now. How about realtor commission, for this property 4k. This broght be to my total of around $35k.

Do these numbers sound reasonable or am I doing fuzzy math?

That makes sense in a “Judicial foreclosure” state.
In the case of a power of sale, when they are already at
a loss and have filed the Notice of Default, they have
90 days to finish the auction. At that point, the lender
already owes the attorney about 1500. So it is another
2k to finish the newspaper ad and do the auction.

Of course, the lender will have to hold as collateral about
5-7 times the loan amount, which is not making money
for them either. And then the possibility of the property
becoming a REO and the eviction costs etc.

But let me tell you. There are folks scooping the properties
at/over tax value sight unseen. Don’t know if these
folks will stay in business for long, but i know the lenders
are happy and arrogant due to the confidence that it will
sell at the court house steps.