One question for the pros here…people who have done a few dozen deals please.
What’s your average time, while realizing that some take a few weeks, other short sales can be six months…
And something the gurus NEVER tell us…out of how many contracts you get, most even with a second, do you actually get a successful short sale where you pocket 20K plus on a deal?
Two of the questions I’m really wondering about! Thanks!
Good Afternoon,
Most shortsales take 30 - 120 days depending on the lender and how well your paperwork is in order. How much each one makes is usually based on what properties you go after. For me, $10k is minimum, you will run into a few in the $20k - $30k range; but if there is that much equity, the seller can usually dump the property at a lower number and still walk away with some profit. I have found the more profitable deals are because the property is in disrepair, because of this the seller has a tough time selling it and the bank doesn’t want it back.
Go Get’em!
Ray - Indiana
Rayr,
Sounds like you have done a few short sales deals. May I ask how long have you been doing this for?
Also, wanted to find out where you found most of your short sales deals from. What is your best source? I would love to chat with ya and find out how you come to find your purchase price (offer) to a lender.
I am just looking for some help in getting myself off the ground and running.
Again thanks,
Joe
Hey Joe,
There are a great deal of factors to consider when offering a short sale, one of the biggest being what type of relationship you have with the lender and what their attitude is toward investors and shortsales. I have been working with banks and real estate for about 14 years.
This certainly changes based on the area, the home and what shape it’s in, but as a general rule here is what I offer;
65% of the BPO (Brokers Price Opinion)
less the cost to obtain, hold and rehab.
Example -
BPO - $100K
65% is $65k
Cost to Obtain including loan costs, closing costs, etc.
(usually 3%) or $3k
Holding costs are based on the average Days on Market for that type of home in that area, for this example let’s say it’s 90 days; I figure $300.00 monthly. This includes utilities, keeping the lawn mowed, etc.
$300.00 mo. x 90 days = $900.00
For this example we’ll say this home needs $2500.00 worth of rehab, paint, a few windows, etc.
$100k BPO
less $35k (65% of BPO)
less $3k cost to obtain
less $900.00 holding costs
less $2500.00 rehab
My offer for this home would be $58,600.00 if I did the math correctly.
I hope this helps. Remember, you have to make a profit, so I suggest you don’t make offers you think the bank will “like”, they are professionals and in business to know what they are doing. When you explain to them how you came up with the number, they will not be offended.
Go Get’em!
Ray Rochefort
Managing Member
Purpose Investments LLC
Indiana