Short Sale advice needed for 1st SS

I am trying to make a go of Short Sales doing it as a second job right now. Being a teacher full-time, it leaves some time to learn the trade, but not enough yet to know all the ropes. I’ll try to be as clear as possible…

Once somebody has filed bankruptcy is there a possibility for a short sale?

The house in question is valued at $215K and they owe a total of $250K. I ran into a teacher friend of mine and mentioned short sales only 1 day before her bankruptcy went through. Now she is going to let the house go to foreclosure no matter what. Couldn’t I short sale it and give them a Bill of Sale for cleaning/trash removal to pay for moving expenses? Since they are good friends that have resigned to lose the house anyway, I am aiming to get them a substantial portion of the money and I would take a fairly small cut for myself.

What do you think? Is the bankruptcy a pawn against the bank? Since I know this lady very well and consider her a good friend, I could ensure/sign contracts that she’ll be out regardless of her bankruptcy by a certain date. This would give them time to gather themselves for the move and pay off bills. I’m sure the bank would like the idea of that more than hanging on while she’s bankrupt. Heck, her husband might even file after the time is up for her bankruptcy filing—extending their stay even further… They have done some work in the house, but I’m pretty sure I could get some convincing pictures that show disrepair for the bank. She said it was in rough condition when they bought it.

Should I go for it or is it a lost cause due to the bankruptcy? I don’t know enough about the bankruptcy process and how that affects a Short Sale. Thanks for any and all advice.

Someone correct me if I’m wrong, but the property has to be released from bankruptcy in order for it to be sold. And a SS of course is when you sell the property “short”.

If this is really a very good friend and you are actually concerned about her, the best thing for her is to keep the house and mortgage in the bankruptcy.

On a short sale, she will still owe the bank the difference of the mortgage money that the bank didn’t get. If she pulls that house out of the bakruptcy, she will still owe that money.

If you are going to purchase a short sale from someone you care less about, you simply get permission from the bankruptcy courts to do a short sale. Then you put in the offer to the bank.

You can go with her to her bankruptcy lawyer and see what he says about leaving the house and mortgage in the bankruptcy and still short sale-ing it. If you don’t do it exactly right, you won’t be doing her any favors.

Is it possible if they pull the house out of bankruptcy & SS it, that the money that wasn’t met with the SS would be forgiven, if it was their personal residence?

If I request that the bank waive any Deficiency Judgment, would that take care of the loan difference in the eyes of The Bank, or would I get nowhere with that after the bankruptcy filing?

To me, doing the SS provides my friend with money to move on with through a Bill of sale afterwards. Otherwise, they are stuck where they are and penniless. I would have them wait out their bankruptcy time in the house to get the maximum ‘free’ stay. If only one spouse filed bankruptcy just a few weeks back, then I would have the other do so just days before the first bankruptcy goes up to also extend their stay further. At that point, I would see if they would allow a SS to occur. I am focused on making sure that whatever happens, it is only a positive outcome for them. If these means letting nothing happen, so be it.

More ideas and insight are appreciated. Keep it coming!

I suggest you put the short-sale package together b/f you ask the trustee to pull the house out of the bankruptcy.

Is the property in foreclosure? Is it in bad shape? Obviousely the owners are in a bad financial situation. Were they behind on their payments? Get the borrower’s authorization to talk to their lender, and find out where the homeowners are in regards to their payments. Then tell the bank that you’re working w/ the homeowners to sell the property, and it looks like we need to do a short-sale. Ask the bank what you need to obtain from the homeowners for that to happen.

That’ll get you started…

  • MJ