Hi,
Got a deal in the works. Condo was purchased for around 200K, owners have 70K, maybe less, in equity. Problem is - condo assn. is totally yanking everyone in this gorgeous gated development, raising the dues every other month. It was 80.00 when they moved in November 2005. It’s up to 225/mo, and owners just got notified it will increase to 300+ in next 3 months. People are leaving in herds, around 30-40% of the units are for sale. How can the association get away with this? The RE market is also going down.
Anyway, they are in default, behind 3 months with mortgage and condo dues. My question is, I do not think it is worth more than 170-180K for these reasons. Can I still short sale if they only owe 133K? What should I offer the bank?
The condo is mint, new (a late 2005), with granite and all the final touches. A landlord could waltz right in, paint the walls and rent it. The biggest problems are the condo assn, and the fact that 35-40% of the units in this gated community are for sale, other owners are appearantly being driven out for the same reason. I am appalled at the greed of this condo association. Someday when I have the means, I’m going to go after people who do this to others. I am a new investor, Please advise what I ahould offer the bank and what should I offer the owners?
In most cases the bank does not want you to offer the owners a dime. I would for sure pursue the shortsale option but if everyone is leaving the property do you really think this a good deal for you. What i mean is, What is your exit strategy?
Also, What to offer the bank! never go no more than 80% of LTV. start here and substract things like arrearage, condo fees, closing cost and title fees. Make sure you due a “subject to” this requires no personal financing and you just take over the payments. If at all possible during this process, find a buyer fast.
And if you choose to give owner some moving cash i would not advertise it.
I hope this helps some
I am sure there are others that may have a different view of you situation.
Rito
Thanks, Rito.
I am looking for a buyer right now, but it is difficult to tell them how much I am going to sell it for, when I do not know how much the bank will short sale it for. It’s a catch22. For now I just wait for the bank’s final number and go from there. I hope they are quick. They seem easy to work with. I get the appraisal today and then Wednesday, I make my first offer tot he bank. I will keep the board updated. Maybe another newbie will benefit.
Once you have the appraisal take and minus how much the seller is behind, repair cost, misc fee.
Formula ARVx70%-repairs-5000=Base offer
Never pay more than 80% of after repair value(ARV)
Just remember don’t let the bank tell you what to pay they are negotiation, make a counter offer and this is a process to follow sometimes it takes months back and forth. They may not respond but don’t let up.