Looking for a short sale pro who is interested in 2 condos in Lake Worth, FL. They were prior condo conversions. The owner bought them in July and Oct and just wants out. He found out the rental market is not high enough to carry these mortgages and can only carry them for another few months till all the money is gone so I am trying to help him out.
Any guys want to do a short sale on these condos. This is not my field of investing so I can not do them nor am in interested, but maybe some pros would like it.
Here are basic numbers
Boought in July 06 for 304,900 with 100% financing. So he owes 304,300 now. 80/20 loans with 1st at Avelo and 2nd Homecomings.
2nd condo bought in Oct 3, 2006… Purchase price 320K, put down 5%.
Loan are bought bought by EMC. Owes 304500…
His only scare is his primary home is also mortgaged by EMC with both notes and hopes no problems with that. Not behind on any payments.
Condos appraised for 320K in Oct, but was still a little push to get it. Realistic its more like 305K but with the slow market, they would fast sale for around 270K if on MLS…
Let me know if your interested. He is a friend of mine to some point and like to help him out of bind and keep his credit. He just make mistakes and now has learned. But I know he can short sale w/o being behind and save his credit 100% so he can work smarter next time.
Is the owner behind in payments, and if so how much ($ and time)? If not in foreclosure, or perhaps pre-forclosure (before any official filings) then the lender will most likely not consider short sale.
Assuming market value of $270K than negotiations would need to reduce total debt to 70% LTV or approx. $189K. This is much easier if there are second and third notes whose elimination would approach this sum.
I am not familiar with Florida law, but if no one else steps up please advise. Be advised if owner has other assets than lendors will pursue a deficency judgement. He needs to make himself as poor as possible.
NO he is not behind on his payments. He has been making them. His idea of short saling them was something he decided on after talking to some other people. He still has about 3 months of money to carry the mortgages. Things happened this month that put him into this position to need to sell or short sale it. Thiing is, he can not sell for 270K as he can not cover difference in mortgage to purchase price.
He has one other property, but its in his LLC name, not his…shows on credit report but also has another person on the deed.
Merely having another person’s name on the deed will not prevent a lendor from pursuing a deficency judgement.
The lenders will not negotiate until he is in a hardship position. He will need to write a hardship letter, and I am afraid that simply stating that he made a poor decision will most likely not go too far.
At this point there is nothing that I could do, it would be a waste of his money. If foreclosure is inevitable he should empty his financial purse and bite the bullet.
Without extinuating circumstances surrounding his loans then he will be hard pressed
to get the lenders to agree to SS. One reason is that the loans are sooo new, less
than 6months old! Their loans were based on what comps sold for within the last 6-8
months on both of these properties.
He would have to submit proof that the properties are not worth what the balances are.
This would require him to hire a Realtor to do a BPO (Broker Price Opinion) that states
that the original appraiser was wrong and that now these properties are worth 270-275k
or whatever sales price they would fetch on the open market. SS are based on proof that
the lender is better off taking a discount and getting cash now rather than waiting several
months, spending thousands of dollars in legal costs, and keeping a non-performing loan
on their books. He has to sell them on the fact that taking the 270k now, is better than
getting the 300k never!!
SO would you recommend he talk to the bank about listing FSBO and wanting to be able to sell for 270K range and get a local realtor to show comps in that range, especially within that developement. I personally know about 10 units pending for sales less than 275K in that complex…all same floorplan
I like to try and help him out. Me buying is not the solution. DOnt know any buyers willing to pay 300K since it is overpriced now…
Would you advise he call the mortgage companies and let them know of his intentions now. Should he just deal with the 1st only?
He should definetly let the lenders know that he is experiencing extinuating circumstances financially and that he does
not have another exit strategy other than selling quickly for the discounted amount (270k). It’s not totally just about the market value of the home at the present time, because as you know the market can adjust at any time. Just because it’s worth 270k now does not mean it would’nt be worth 300k + in several months. They are many investors that have a buy and hold long term mentality so they ride it out and get the appreciatiated value later on. Lenders know that in most major markets that the values will rebound at some point, whether it’s 6 months or 6 years from now. The key to building true wealth in real estate is a long term cash flow strategy, after all he does have a 30 yr mortgage.
The key for his success with the SS is to show Hardship, any type of explanation that makes the lender hear Violin strings
would go a long way. Do the properties need work, was there fraud involved, is he financially insolvent, divorce, death in
family, laid off from job, bk, illness?? These are the types of issues that motivate the lenders to make the decision to short
accompanied by signifigant and compelling proof of what the current market values are (BPO/Appraisal).
He is facing an uphill battle, but with the proper documentation he still has a shot at getting SS approved.
I have never had a Lender willing to do or even look at a SS unless the borrower is at least 90 days in default.
I have had 3 Mortgage Lenders in the past 3 weeks refuse to do SS on properties that were purchased or refinanced within a 12 month period.
Their appraisal is good for at least 6 months.
The banks would rather buy back at Auction and sell property as a REO. This is straight from the horses mouth.
Has he thought about Lease/Option to a 3rd party?
Good Luck
Lease option is also a good idear. Good call MDre8. Like I said he would be hard
pressed to get SS on such fresh loans without having extinuating circumstances.
I suggest that he keep All options open.
No one can say if this true or not. But Equifirst, the latess lender I am dealing with is acting like this. Then again, I got a 43k 2nd down to 2k and the house was purchased in Dec 05. Which lenders have you been dealing with?
I think a hardship letter has next to nothing to do with the lender considering your offer. I as well feel that showing the lender that your offer will save them money might be a waste. The homeowner has already missed x- number of payments, are they really going to make up late payments + fees? Maybe I’m a little jaded because the lender I was dealing with failed to pick up my more than fair offer. I now have the opinion that with some lenders its all a crap shoot, at best.
I would love for someone else to evaluate my complete offer to the lender to critque its professionalism.
??? I’ll be more than happy to review you ss package for you and let you know what’s missing…
I strongly believe that showing a legitimate hardship and convincing the lender that they will save
$$ and how are the 2 most important keys in the SS process : What else is more important than
saving the lender money & showing the borrower’s hardship???
I agree that you may just be a lil jaded & your package may be missing the proper bait,
also every transaction does not make a good short sale candidate. Sometimes you just
can’t make it work, it happens.
Lease Option not a good option and tough in this market for a condo. Even on a lease option, he will be heavy negative cashflow. This is a SoFl market. Rentals and lease options really mean negative cashflow. Taxes and HOA are almost 700 a month, then you still have the mortgage. Its a 3/2 condo…rents are about 1300 a month and thats tough to find. He has been looking so as many other owners in the complex.
Well one person contacted me and said they can short sale his condo but can take a few months. They want $1000 to do the short sale on both. He said normal fee is $695 per unit but since there are 2 involved, he give a discount. Thinking of letting him do this for my friend. He CLAIMS there is a legal team involved and they go thru all the paperwork and hardship letter. He says the hardship letter is the key plus little funds in the bank.
BUt in mean time, which is odd, I just a great deal on a condo and I think I am going to tell him to buy it and I will pass on this great deal which can help him alot. He can pick up a condo bank owned for $590K and it was just appraised for 950K. Needs about 40K in rehab to fit its market, but livable. Just needs the older tile replaced thru out and all the wallpaper gone and paint walls along with 3 new bathrooms. Has new kitchen and ocean views.
He can get this with zero down and refi it immediately and pull out over 200K and still leave over 10% equity in it and just list it for retail near price…
Maybe his best option,plus he will have plenty of money to fix his mess/ Sometimes spending money can help you…
What else is more important than