I was recently called by another investor in CA that got into a deal that put his personal credit on the line for a few houses. Heres an example of just 1 of his houses.
Purchase Price $800k
Comps for the exact same model home in the same Tract is $550k.
Purchased 12/05 and is currently 4 months behind in payments and is facing foreclosure. Foreclosure date is set in late January. The property is 100% financed no 2nd mortgage because of the group credit they put together.
He is upside down. What would be the next step for a Short Sale?
From what I understand about the process I need to get a Letter of Authorization from the owner. Then what? Also this house is listed with a Realtor which s/he has already stated her part of the deal and that she has exclusive rights to all of his properties.
Any advice would be much appreciated. Thanks in advanced.
In a short sale, the lender has agreed to look at a purchase price lower than what is owed on the loans. Don’t worry about the exclusive listing, the realtors commission is paid by the bank. They are going to accept an offer to get the property off their dead beat list. They don’t want to go through the foreclosure process because it will take them another 3-12 months to get the property sold. California has both judicial and non-judicial foreclosures. The realtor will present your offer to the lender. The lender will show the short fall on their balance sheet but it is better to get $400K on the property than to show a total write-off of $800K.
I am a real estate broker and loan officer in California.
Thank you very much for that info EpicDave. I recently spoke to the realtor and she is going to put in the offers to the bank for me. I just need to comp all of them out to make sure I’m comparing apples to apples then I’ll email her my offer and she offered to write them up. She already knows I’m shooting for gold and I"m going to lowball… LOL. She was actually more helpful then she seemed last week. I’ll try to keep everyone posted on how it’s going. I’m going to start rediculously low like 50% of comps to give me negotiating space. These properties are in high-end area some are age restricted which makes them even tougher to resale and I hope the bank goes for it.