Question that may be obvious but I am just not getting this.
My short sale experience is limited, I have been learning under an investor I work with who has been doing them for a bit and can get them successfully completed but I feel doesnt know how to squeeze the most profit out of them.
For example, with an 80/20, on a 150 k house, she expects to pay 5k, maybe more to buy out the second loan, when I have read and heard from other members that you dont need to pay more than 1k? And she does not negotiate with the first in an 80/20 because she is under the impression that she only has a bargaining chip with the second?
Anyway, my question is this. On low to mid priced homes, we will say a 100k, single loan with the home at the same value, my understanding is that you can get the bank to accept 15-18% off the BPO, so that is 18k at the top end. If you are to flip this, you are going to need transactional funding which is going to cost 2k, brings the equity down to 16k, and then from there, you can take out your spread. Maybe I am missing something, but what kind of investor is going to buy a house from me that only gives him 11-14k of equity after I flip it to him?
I understand if you are moving a ton of these like Summit, just making a grand or two per, accumulates fast, but me, doing this on the side, where is the value, taking into account the time these take, the risk that they will not work out etc?
Here is the low down for ya! On a 100k house we are getting it for 68.97% (Last months avarage) So we get it for well $68,970.00 She really needs to smash the first and hammer the second. No need in just hitting the second up. Every first mortgage holder will always take a Short. So to be totally honest she needs to hit up the first just as hard as the second.
The 2nd should take 1k. It’s better than the alternative - which is a big fat 0. In the 2nd lien position, they won’t get anything if the house goes to foreclosure.
That said, there was some news last week about major lenders in the 2nd position looking for kickbacks “not on the settlement statement” which is of course completely unethical. I haven’t heard any first hand accounts of this happening, but apparently it has / is.
The 2nd should take 1k. It’s better than the alternative - which is a big fat 0. In the 2nd lien position, they won’t get anything if the house goes to foreclosure.
That said, there was some news last week about major lenders in the 2nd position looking for kickbacks “not on the settlement statement” which is of course completely unethical. I haven’t heard any first hand accounts of this happening, but apparently it has / is.
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While the 2nd is not in a good position, they do not often accept $1k and have no incentive to. They will wait it out and wait for the offer to look better as long as they have time before auction.
I have had the 2nd request to be paid $xxx on the hud and then $xxx prior to closing. Never did it, but it does happen.