I need some help with a pre-foreclosure. The house has been in foreclosure for a while and it appears that the house will be auctioned 3/06. Currently, lender is asking the current owner for $77K to pay off the loan or pay $28K to bring the loan current.
My questions is how should I approach the owner to make a deal and also how can I make the short sale with the lender. The owner is expecting some sort of incentive out of this deal and I am willing to pay something to the owner, but from what I understand if the lender short sales, they do not want the buyer to pay the owner. Am I correct?
Also, if the owner agrees on the deal. What is the process after that? Sales contract, closing, etc, how will this work.
Thanks a bunch for your assistance.
I take it that you’ve never done a short sale before. The owner can’t get any money from the deal. However, there are ways around that. Sometimes I will “pay” the owner to clean the place up, maybe 1k or so, moving money. Also, I take it you have financing in place if the short sale is successful. How are you going to determine what price you’re going to offer the lender? There is a bunch of paperwork you need to have for the lender. I generally get 3 signed standard RE offer forms, that way you don’t have to go back and get anotherone signed if your first offer is refused, and it generally is. You’ll need a financial statement from the owner, last yrs tax return, a signed auth form so that the lender will even talk to you, a couple of contractors estimates for any repairs that are needed (always find repairs to be done), a hardship letter from the owner.
good luck
Thank you so much for replying. You are right, this will be my first short sale. Many things in this process are not making sense for some reason as I try to follow the logic behind the process.
I spoke with the owner yesterday and she told me about the process she is going through. She said she would fight the foreclosure until the auction happens.
It is hard to offer any other option to her at this point as she wants to go through the process until the end and also because she knows the market value of the property. She has tried to refinance the property and that has not worked due to the foreclosure and from what I know about the foreclosure, I am quite certain that the judge will refuse to stop the auction of the property.
My question is why would she give up the property for less than the market value. I know she will not take a couple of thousands to clean up the place. Also, why would lender negotiate with me for a short sale when the property is about to go to the auction in a few months. I know for sure that the property will be sold for more than the amount owed on the property. This property will be an attractive option to investors at the auction because amount owed is about half of the value of the property.
Can you please describe cases where the owner is willing to let go his/her property below market value and also any cases where the lender would negotiate a short sale.
Thanks a bunch in advance.
If the current loan bal is 77k, what would the house sell for if you acquired it? The lender, more specifically, the loss mitigation dept is only interested in cutting their loses short and getting all or some of their money back. To do a short sale the present ower has to be very cooperitive. Unfortunately I’ve seen many in foreclosure do absolutely nothing and lose their homes and all their eqitity. They do have to be motivated for you to do anything.
Current value of the property is at least $140K. Even if I offer the owner $15K, I do not think she will take the offer as I concluded from the conversation yesterday. Also, she is aware of the market value of the property. I know she cannot sell the property because of winter and I am quite certain that the property will be auctioned.
Do you know of any cases where owner is motivated to sell? I would like to know how the owner becomes motivated. It became a puzzle to me after the meeting I had with the owner yesterday.
She is motivated to fight the foreclosure process, but she is not motivated to cooperate with me to get some cash and sell the property.
Hmmmmmmmm… How does the owner plan to fight the foreclosure process. You might mention it’s a fight no one ever wins except the lender. You might ask have they thot about the consequences of having a foreclosure on their credit record? They will have a very difficult time buying another house. Ask they how they’re going to feel when the sheriff comes and escorts them off the property. You’ve got nothing to lose by asking them because it looks like they arn’t going to cooperate with you anyway. As a parting shot you might say " Look, why don’t we make the best of a bad situation. If you do nothing, you’ll lose everything. You won’t be able to stay in the house. Here’s how I can help you. I can keep you from having anymore damage done to your credit. Since you’re going to have to move no matter what, at least I can get you moving money so that you can get another place to live in and I’ll even rent a truck for you and find you some help moving. Does that sound fair? Why don’t we work together on this?"
If they don’t bite, you don’t have a deal and just move on to the next opportunity.
Joe