You could always start out at 50 or 60 cents on the dollar. You
will need to prove to the bank why they should take that offer.
If you just say I will give you 190k on a 380k property, they will
just move on to the next short sale they have going.
There are a lot of different theories on what works and what does not. The bottom line is that you have to convince them (by building a case) that they stand to lose more money later if they don’t sell to you now. BTW does anyone know who puts out a good seminar on the subject that perhaps he could get?
With the exception of one virtually every house we have or have had under contract have been ab-so-lute-ly pristine. Beautiful. Most of the homes we are trying to short are ten years old and under. Fair Market Value is the lenders favorite buzz word. I did no do the negotiation on the house encumbered by Chase but that episode has spooked me into trying to be as fair and upfront as possible.
There are a lot of other factors as well in FMV. Understand that their are two perspectives here…Yours and their (the bankers). What you have to do if find where it intersects.
Location, marketing time (no. of active buyers in the market in that property’s area), Timing of you are making the offer, and how many other offers are pending. Are you trying to buy one property or a part of their portfolio, financing terms, their REO load in the area etc etc… Type of loan, MI or HUD all these things can be worked…
In my experience, Conditonal adjustments dont really mean that much to a lender, they already have that adjustment accounted prior to taking bids on that property. What they dont know a lot of time is what the condition really is so a BPO as mentioned in the earlier post is very important. After that work on the other items. Then go in and negotiate.
Short sales are extremely difficult and time consuming here in California. The biggest obstacle is the real estate agent BPO(broker’s price opinion) >:(The lender sends an r.e. agent to give the lender the FMV based on the current condition of the property. I have lost 3 short sale deals because the BPO is $100,000 to $80,000 too high. I’ve done everything possible, meet the agent, tour the house, point out all the repairs, show the declining market, comps, etc. I tell them what I’m offering the lender and why, They always agree and then turn around and send a report with high numbers! From that point on the lender will not accept any lower bid.
All three properties went to auction(lenders are now short selling at auction) all 3 didn’t sell,went to REO.
We are now working with agent assigned to the properties.
98% of the NOD’s qualify for a short sale. Everyone pulled out their equity or they just purchased in the past 12 months and can’t afford payments and market has dropped 12% in the past 9 months.
We still have 4 short sales we’re working on…
Bottom line: Until these lenders get stuck with a large inventory of properties, they aren’t willing to discount very much.
I’ve found that true on two SS I worked on. I pointed out all the problems with the home and they too seem to agree and then go and write up a FMV report for the lenders. One of the places sold for the same amount I was offering 6 months earlier. Other is still for sale.
Here in Chicago many lenders already have a large supply of surplus homes yet they still often attract a “R.E. investor” who will give them what they are asking and think it’s a deal.
I guess your best bet is to offer what works for you and if accepted go for it.