short sale question

I’m trying to get familiar with the ss. It is my understanding that if there is alot of equity in the home then the bank would rather foreclose, but if thr LTV is preatty well maxed out then the bank might accept less rather than getting nothing. Am I way off? If I am close how much will a bank take .90, .80, .70 cents on the dollar. I know it is case by case, but have you on the field found to be par.

Thank you

Howdy Trwilliams:

The lender will not get nothing if they foreclose. They may end up owning the property and having to sell for less but they will get something. They are willing to deal to get as much as possible as soon as possible especially if the property is in bad condition. I would just make my best offer and see what happens. Start at about 65% ARV less the rehab costs. As an example if the comps are worth $200K and your house needs $20K rehab offer equals $200K times 65% or $135K less $20K equals $115K. You may be able to pay more if you are not using hard money lenders or want to keep the property as an investment or a home to live in and can get conventional financing. The numbers above are for buying and flipping using hard money loans. Most HML’s will not loan over 70% of the ARV.