I’ve been reading your posts for a while now but was too scared to jump in. I’m new to this game and it’s my 1st time participating to a chat room, ever. I’m a real estate agent turn investor in FL. I’m currently working on my 1st 2 shortsales and running unto road blocks. The 1st one is a 3/2/2 on a saltwater canal built in the early 80’s with no upgrades since then. Its ARV is 315k repairs and upgrades50 to 60k offered 146k. the bank (WAMU) ordered a BPO last month came at 315k., still no counter from them. Now they called me to tell me that they’ve ordered another one. How do I deal with them? I know they will counter up. What do I counter back. I need to wholesale this property.
the 2nd property is a 4/2.5/2 2story home. which needs a lot of work but has great potential. the owner has 110k in 1st mortgage (first Franklin), 32k in 2nd mortgage (Wachovia thru their lawyers) and 8k in tax lien. ARV 260-300k repairs 60k offerd 1st 45k, 2nd 1k and IRS 500.00. Irs want an appraisal with its paper work. 2nd want a copy of the 1st HUD and 1st ordered a BPO. How do I deal with the 2nd.? do I send them a copy of the 1st HUD? which doesn’t included their 1k .I had sent them an HUD when they requested one based on their 1k last month, I received an email today telling me that the rejected that. What do I do now? and who pays for the IRS appraisal or can I get around an appraisal. I plan on rehab this one.
You guys have offered some good advices before, now I need you in my corners. . I’m not sure what to do and I need help. PLease work my numbers and give me different senarios.
“the bank (WAMU) ordered a BPO last month came at 315k., still no counter from them…” How did you find out the bank’s BPO came in at 315K?
Once they do counter you (315K or whatever) raise you offer a few thousands and tell them this is your bottom line price. The goal here is to meet somewhere in the middle closer to your price.
As for the second, send them a letter every few weeks reminding them of the approaching date: “wipe out”. If you really want the property, raise your offer a couple of thousands towards the end.
As for IRS, I have not dealt with this matter before. Perhaps someone on the board who has can offer some guidence.
Banks are VERY difficult to work with. In addition, when dealing with banks, short sales are the most difficult types of deals to do. I’m just wondering how you chose short sales as your first strategy. I’m not saying that it is impossible, but I am saying you chose a hard way to start.
The reason you’re running into a roadblock is that the bank thinks the property is worth $315K, since that is what their BPO told them. If they really believe the property is worth that much, they don’t have a lot of reason to drastically lower the price.
Nozimag,
first, hello neighbor! Second, you should not be scared to “jump in” on this board. Everyone here is here to help. After all, you are on the “newbie” board.
Second, what town is your saltwater canal house in? Is it a deep water canal with good size boat dock? Is it direct access i.e. I could get a 40 ft Hatteras straight to open ocean? We will need A LOT more details, but it sounds very interesting!
I have had the unfortunate experience of dealing with the IRS a few times on deals like this one. Your numbers are off on all 3 lien holders. You are going to have to deal with the IRS over everyone else, although you don't need to deal with them first (you probably know this already). The 2nd mortgage is your profit center, but the BPO is going to throw a monkey wrench into the whole deal.
Sean Flanagan
You can forget this deal. You’re offering to pay $47K for a house that, using the 70% rule, you could go as high as $122K on. I can appreciate your effort to get a great deal done, but I don’t think you’re coming in with anything that people will consider seriously. I also think you’re biting off more than you can chew by trying to do a deal with a first, second, and an IRS lien.
Lastly, and perhaps most importantly, the first has no real reason to do a short sale with you. Their position is pretty secure in terms of LTV. If they have to foreclose, they won’t lose a thin dime, so they are not about to take a 60% loss.
The second might play ball, but my guess is that they won’t, again because of the LTV, which is not so dismal that they should take a 97% loss.
The IRS is also not likely to settle when, again, they will think there is enough equity in the property for them to come out whole.
You could pay $122K. That would get the first paid off whole and give the IRS 50 cents on the dollar (assuming they take it), leaving you $8K to try to make thesecond go away. I doubt they will take it, but you can try.
Personally, I’d pursue something a little less complicated, but that’s just me.
Guys, thanks for all your comments.
G-222: the negotiator told me about the 1st BPO when she told me about the 2nd being requested. Thanks.
Mike: The reason I chose shortsales is because I’ve lost my house to a shortsale and I’m also a real estate agent (new) who sees a lot of people about to lose their home that has no equity left. So I decided to take action and help people to keep their dignity while I make some money out of it. I know it’s a hard way to start but its kind of felt onto my lap. Like you said it’s not impossible, so I’m willing to do what is necessary to make it happen. Before I started to read the posts I was a victim now thanks to all of you I’ve decide to act instead of feeling sorry for myself and I like it, thanks.
Sean: I’m in palm coast, fl. the canal does have direct access to the intra coastal and the house has a deck that could hold a big boat. (I don’t know about boat so 15 or 40ft, I’m not sure.). When it comes to the 2nd property the fact of dealing with the lawyer not the negotiator makes me a little uncomfortable. I’ll be happy for all the help that you can give and be happy to drop you an email but how do I find your entire email address? Thanks
Paul: let me mention that this house fits the ugly house criteria. All the bathrooms are gutted, I have holes all over the place, garbage and clutter in every area with applliances that makes you wonder I could people use them. I admit that I’m biting more than I can chew but it’s a risk I’m willing to take and a leraning experience I can’t pass off. I’m willing to go up a little if I need to but let’s not forget that the total debt includung the IRS is around 155k. If it turns out that I can’t get my price range I’ll definitely consider your idea. Thanks.
And guys thanks for making me feel part of the team. I’m greatful!
One thing our company has started to do is work with Florida Realtors and offer to outsource their short sales. We also have a method for JV’ing the short sale if you feel you have an end buyer for the property at a price around the BPO. The full explanation is best done outside of the forum but I would be happy to explain the details to you. Call me on my cell phone.