A couple of questions. I haven’t invested in short sales since 2007. I spoke with a guy about buying his house on short sale last week. His house is going to auction next month. He owes 185k and through some comps in the area, house is only worth 125k plus it needs about 10k in repairs.
As investors, are we still able to submit offers direct to the banks LM dept or does the house have to be listed and put on the market?
If I can deal direct are we getting the deed to the property or doing an option?
What are the chances of buying this thing at 70% minus repairs so I can wholesale it?
If I make it to the end, are we still able to assign the contract to an investor to close the deal? If not, any other ideas?
We’ve dealt directly with local banks to buy foreclosures from them. One bank had so many from a failed deal a few years ago that one of their employee’s main job was to manage their new “portfolio” of rental properties. These houses were never listed on the MLS.
Since the bank already got burned on the loan and is having to take the property back, they’re most likely not going to want to mess with people assigning contracts. They want to know the person they’re dealing with has the capacity to close the deal themselves.
For prices, you never know. We’ve had some pretty decent deals from dealing directly with the banks. Sometimes they’ll want to hold firm for their price in the beginning. Other times they just want to get rid of them because they don’t want them on their books.
The fly in the ointment here is that closing on a short sale generally takes 4 to 6 months. Additionally, the department that oversees the short sale is usually not the department that schedules the auction. I have seen properties that are in a short sale transaction still go up to auction.
You could, however, submit an offer through the owner’s lender providing that it is not listed with a real estate agent. You will need to stay on top of this. But, do not be disappointed if the bank shoots down your 70% of value offer. They are probably looking at claiming the property after auction and listing it at market value.
Another option is to let the property go up for auction and then work with the original owner to reclaim the property during the redemption period. IMO this is your best option. That is if there are redemption rights after a property auction.