We are looking at a duplex short sale and they say they want $20,000 for the owners bankruptcy fees. Is that even legal? We’ve been researching and it doesn’t seem quite right. Any advice is greatly appreciated. Thanks.
Nothing illegal about it.
You either figure that $20k into your offer, or make your offer and let the seller work that out with the bank.
It doesn’t matter what they “want.” You either put it in your offer contract or not.
Their main goal for doing a short sale should be to avoid foreclosure. However, I can see where they want to get something out of the deal that can help them in the long run. The only problem is that once the bank accepts your short sale offer, they will keep every red cent. There’s no way they’re going to accept less than what the sellers owe, then cut them a check for $20,000.
And, by the way, since when does a bankruptcy cost $20,000? If they cost that much, people who need them could never afford them. But, anyway…
If you have the hard cash to give them $20,000, and adding that to the amount of the short sale is still lucrative for you, it may be a good deal. The two of you can sign a contract stating that you will pay them $20,000 contingent upon the bank accepting your short sale and escrow closing. Other than that, I don’t see any other way this would work out for both parties. The only other option for them is foreclosure, even if you don’t agree to the $20,000 fee.
Thanks for the tips! We decided that we could find many better uses for 20 grand then helping someone out of bankruptcy who we’ve never met. We also decided that the duplex needed even more than 20 grand worth of work to even make it decent. We walked from that one and are now in negotiations on another. Thanks again!
I believe you’ve made the right choice. Short sales are only lucrative for the buyer/investor if they are a deal. Anything other than making a good ROI just defeats the purpose. You may as well just buy a home on the open market that stands a better chance of being well maintained, or look into buying foreclosures. I wish you good luck on your new path.