short sale question

this question is for investors who have done multiple short sales-
do banks really accept 50-60 cents on the dollar or do they go just by the bpo? im working on a couple deals right now, nice houses that dont need any work, the bpo will come in at its market value in sure but we are not in the business to buy at market value, so how do you get these properties at a discount? i would think the bank would take some kind of discount know that they will have to pay at least 7% to an agent

You need to meet with the BPO agents and try to influence the BPO. If the properties are in good shape you need to work on the human aspect of the situation.Try to get the loss mitagation agents to see your sellers as human rather then a case number. Either way short sales are tough and take persistance.

Why, you do a short sale of course. :biggrin

If you read through the various posts in the Foreclosure, Short Sales, Tax Foreclosure, Tax Liens Forum here at the REI Club you will discover various different styles of conducting short sales. You will also learn valuable information pertaining to the process of a short sale.

All joking aside…

Each foreclosure, that is… each short sale is like a snowflake in that no two are alike. Your asking how to create large profit spreads by obtaining larger discounts. There is really no way to answer this without an example. If you have a specific deal your thinking of give us some more info on it. The collaboration here will have fun giving you tons of ideas on how to generate a larger spread…or if it is even possible to do for that deal.

First, banks don’t pay 7% to agents, 5% is about tops but it is a long way from theorizing that they have to pay agent commissions to getting to 50-60 cents on the dollar.

“50-60 cents on the dollar” can mean alot of different things.

If you mean 50-60% of current FMV, possible but not likely.
If you mean 50-60% of the loan value, very possible but meaningless
If you mean 50-60% of ARV, possible… especially if alot of work needs to be done
If you mean 50-60% of BPO, not happening.

The way to make money on SS is to get the BPO as low as possible. That is the only true variable in the SS process. You must get BPO lower than true FMV.

Very good points by eric3!! 50-60% of BPO absolutely is not happening. The discount depends on the type of financing and the BPO evaluation. The discount lenders allow is a specific % of the BPO value depending on the type of financing…ie FHA, VA, Conventional. You might get below 80% of the BPO on conventional, depending on the lender but that means nothing unless the BPO is under FMV on a pretty house. Also, on a pretty house the BPO will be similar to FMV.

Make sure you are present for the BPO but be careful when persuading the BPO agent. Make sure to point out all of the needed repairs etc etc but DO NOT make up issues with the house unless you can substantiate them. That would be illegal!

Who gets the bpo agent and what does that stand for exactly. Sorry , can’t keep up with terms.

BPO= Broker Price Opinion. The lender commissions a real estate agent to look at the house to give them an idea of it’s current market value- BPO.