Settlement statement... how to handle profit

First position $365K, second position $85 ($450K total excluding penalties and lates). Appraised at $450K, have a buyer at $420K. Most recent comp sold for $330K. First has discounted to $330K with $1K to second contingent on second accepting our offer.

That offer to the second is the kicker.

There is a possible $73K on the table (not counting the 3% commission). How is this reflected in the HUD1 that the second wants to see?

I do not want to adjust the selling price down as that smacks of fraud, but if I show the second that there is a substantial amount in the pot for them they are going to want part… if not all… of it, removing any incentive to do the deal.

The first wants their money now instead of later and are willing to postpone auction. I have offered $5K to the second but they insist on seeing the HUD1. The property goes to auction in nine days.

As I think about this I think the right thing to do is to simply show the profit and tell the second that our offer of $5K is firm. The manager at the second will bank $85K towards her bonus if she settles, nothing if she doesn’t.

I have a former employee advising me.

So are you saying that you will in fact show then 2nd the hud1?

Not sure if these are doable but,
If your buyer is a cash buyer or has some cash available, assign the 335k contract to him for 73k cash. If he doesn’t have the cash and will get financing, you should be able to do a double closing.
I think these 2 methods will show both banks that you are not making any money. If you put your self on the Hud1 as making 73k, either bank wont like this especially the bank that is suppose to get 85k but is only getting 5k

I am having trouble following this. Why is the appraised value at $450,000 if the most recent comp is $330,000? When an appraiser does an appraisal, he takes into account the comps. It seems to me the value would be closer to $330,000. The new buyer will have trouble getting a loan for $430,000 if it comps out closer to $330,000. The bank is acceptin the short sale because its been proved the house is only worth $330K.


The 330K comp came in after the appraisal. The property went back to the beneficiary without anyone taking any interest in it. The property that went back to beneficiary was VERY comparable, located four miles away.

Okay, we are now four days away and the second has approved for 20 cents on the dollar.

I didn’t bother telling the second what the first was considering offering. I added in a fair chunk of repair, painting, and landscaping costs.

It’s all working out so far.

Can you realistically close this deal in a couple of days?
Getting a postponment on sale seems to be the thing to do.

The first is absolutely willing to postpone.

If they are willing to postpone then why the countdown…