SHORT SALE BASICS

Foreclosures, Short Sales, Tax Foreclosures
1

HEY GUYS

I HAVE FOUND A SHORT SALE IN MY AREA. THE HOUSE IS ON THE MARKET FOR 189,000 THE OWNERS HAVE A MORTGAGE FOR 226,000 ON IT.

I HAVE NO IDEA ON WHAT TO DO WITH THIS? SHOULD I GET TRY TO TAKE OVER THE DEED AND BRING THE OWNER UP TO DATE ON THE PAYMENTS AND THEN OPTION THE HOME?

IS THERE A WAY I CAN TAKE OVER THE DEED, THEN SELL THE HOUSE FOR 210,000 AND COLLECT THE DIFFERENCE BETWEEN WHAT THE BANK WILL ACCEPT WHICH IS 189,000.

HOPE THIS MAKES SENSE. ANY ADVICE WOULD BE GREAT, NEW TO THE SHORT SALE GAME.

THANKS

RICKY

2

Hi,

Generally speaking as a real estate investor reguardless of method used to purchase or control the property we want to try to get that property at 70% or less of current value! If this house is on the market for $189,000 then a number of professionals have reviewed the comp's (Comparable Market Analysis) and determined this is what the market will bare!

There are two ways lenders look at properties which are a retail and wholesale mind set, if you find an owner in distress who has not listed his property or spoken with their lender then the lender is more likely to look at a wholesale price when a short sale package is created and presented to lender which includes your wholesale offer in contract form!

If you or I are looking around our community or city we see plenty of “Short Sale” properties however if they have already been listed, the listing is for retail pricing (Full Value Set As Price) because if the lender has talked with their borrower and gone through the financials and determined it’s in there advantage to help the original borrower short sale the property they have it listed for retail price!

If market is $189,000 then you should be buying it for $132,300 dollars, and this price being good condition, updated, move in ready condition! If this property needs work it should be deducted from this $132,300 price so $10k in repairs makes the offer $122,300.

There is no way your going to change the banks mind set unless the property is within days of being foreclosed on and after marketing it for months has not recieved a single offer, then you might pull a low ball offer and get it excepted!

I don’t know how you come up with taking over the deed if the deed is for $226,000 and then selling the property for $210,000 if todays FMV (Fair Market Value) is $189,000???

Short sales is a very tough area to work in if your new to real estate! I don’t do short sales today although I have done many simple because I have to many other available properties where I can find out I have a deal and signed contract in 2 or 3 days that I can sell for good profit’s, rather than waiting for weeks, months or even half a year before the lender decides whether and what offer to except for a property!

$189,000 is the agreed short sale price not the deed!!!

                 GR
3

Gold River

VERY nice clear concise response. Glad to see it.

Bill H

4

Is it always a good decision when you end up on a short sale?

5

Bank of America is the best bank to work with on short sales because you can get approval within 5 days if you submit the right paperwork.

6

short sale only means that the sale price is short of the mortgage balance.

this has nothing to do with what the property is actually worth.

the bank could do a short sale and still sell the property for more than it’s worth.

7

First time for everything! Bank of America is the best!! I worked for them for a few years doing Loss Mitigation training/Short Sales/Equator and I have never heard they are the best before. I agree though if you know what you are doing then they are amazing. If you don’t know the in’s and out’s your kinda stuck.

8

You can get the homeowner to deed you the property; called a Deed in Lieu. Get that & Authorization to Release so the bank will speak to U about the property & then negotiate a short sale or loan-restructure. Don’t reinstate the loan w/ your own $ though (never know if SS process will b successful. If homeowner doesn’t have the funds to reinstate -a full blown short sale is the best option. Homeowner still must deed u the property & give u permission to act on their behalf.

9

Shae,

And why would the bank talk to you when you are not on the note with the bank? Why would the homeowner help you commit fraud? Shae you been reading to many snake oil books.

10

Shae:

Your response is about as incorrect as any I have seen in the last 40 years. Apparently you know absolutely nothing about real estate transactions.

As RE Seller said…Either you are reading to many snake oil books or smoking too much Maui Gold!

Either way, stop the nonsense, get and education or ask for assistance

11

If the property is already listed at $189k write a lower offer and see if it sticks… Then ask the Realtor to write 50 more offers on 50 more properties and see if they stick as well. Being in the Industry for a number of years I will tell you that if you don’t have a good Negotiator on your team or know how to Negotiate yourself with the lender’s you are better off just letting the Realtor try and do it for you. NOTICE I SAID TRY… Thats why I said write 50 offers one of them might stick.

12

Thought I might want to mention that after you have that Realtor write 50 offers you might need to find a new Realtor… That Realtor might be a little upset with you… :biggrin

13

When new investors is submitting low ball offers there are investors offing fair prices and closing deals. Once word get out that all you submit is low ball offers no realtors will work with you because you will be a waste of time.

14

I totally agree is Real Estate Seller

15

Maybe you are thinking of 2nd position HELOCs. First lien positions are not 5 days. Even if the seller were to participate in the proactive short sale program, investor approval alone is 10 days. Marketing anywhere from 30-45 days.

16

The reason I say 5 days is B & A give us a list of home owners that is ready to do a short sale and move on and our investors is standing by with funds in hand to buy as-is because the price is right.

17

It doesn’t work like that. You can’t just throw a number and hope it sticks. In the almost 6yrs I did short sales and of the 183 transactions to date that I have done, only once did the lender not order a BPO and took my MLS outputs justifying purchase price.

The way you get a short sale cheap is to find 3 very low priced active listings and 3 very low priced sold comps. You then get a high contractor’s bid for any needed repairs. Depending on the price point, you then go a certain percentage below the lowest comp. For example, if the lowest comp on this listing was 180k, then I would come in at 145k minus any damage. You need to give this info to the BPO agent of the bank.

18

I haven’t seen that. I know some 3rd party vendors of BofA use real estate agents to approach BofA customers to make them aware of the co-op BofA program, but I haven’t seen them give someone like you a predetermined purchase price and a 5 day turn around.

If that’s what you got going on, then you have a lottery ticket.

19

Well, I agree with Real Estate Seller. For those of us who remember 16 month short sales with Countrywide, love the new turn around and communication with today’s BofA. The only thing I don’t like is BofA’s attempt to control the listing agreement and purchase contract of the transaction.

The biggest area of conflict I see between the short sale negotiators and the real estate agents conducting a short sale is that the real estate agents are conducting a real estate transaction while the BofA negotiators are trying to conduct a debt settlement. So many agents can’t get that fact into their little heads. I blame the agents more than the BofA negotiators when an issue happens in a short sale.

20

Agreed. There has to be method to your madness. Hell, if we thought we could get it that cheap, why would we need you?