SS Contract Continguent of Lenders Acceptance

I have a few questions here. Please let me know how to do it.

Property is heading to foreclosure end of next month. Owed on property $160,000. Realtor who did comps suggests listing it for $154,000, to sell fast. (So this would be the BPO, but not from Lenders Agent!!). Property will be listed in order to try to find Buyers.

If I make an offer to purchase subject to Lenders approval of short sale, for say… $154,000 - 82% (or lower???) = $126,000 - repairs of new roof and couple of minor stuff ($15,000) $111,000 does this sound right? Now does this offer of $111,000 have to be in present Owners name and signed by them? In order to present it to the bank? Or do I just present it to the bank for SS acceptance?

Now, say SS is being negotiated and Realtor gets an end Buyer in the mean time, is this contract in the present Owners name? If SS is accepted and the property becomes mine how do I have the new contract changed into my name instead of present Owners in order to flip it?

I hope this all makes sense. Thanks

I can’t say this makes perfect sense but I’ll throw some thoughts in. You need to read up a bit more on the process.

First, by definition, a BPO should take into account the repairs needed on a property so typically you can’t really say 82% of BPO minus repairs =111,000. Repairs are in teh BPO so it is just 82% of BPO that will get you close to what will be accepted.

You are buying from the HO. You need to have a Purchase Agreement with the homeowner prior to submitting the SS package to the lender.

You need to get the Realtor to stop marketing the house while SS package is in play. (not always easy) If they get a better offer while your SS is in, they probably have an obligation to show the lender and definitely have an obligation to show the HO. That forces you to increase or lose the deal.

Some people actually “get the deed” from the HO to avoid this situation. I do not and can’t advise on it.

I have never done a ss, but have read a ton, and am really beginning to feel that I understand the process.

From what I’ve read most investors offer 65% or 70% of the BPO.
So say your BPO is (154,000 - 15,000). Your low offer would be $90,350 and your MAO would be 97,300. If there are any missed payments that need to be caught up on, that needs to be factored into the equation as well.

Also, in reference to the quote above, you can either use an assignment, or a double closing to flip the property. Most banks won’t allow you to assign the contract, so you should probably plan to find a title co. that is well versed in simultaneous closings. I’ve also heard that you can buy the property into a LLC, and then sell the entire LLC to the end-buyer.

From what I’ve read most investors offer 65% or 70% of the BPO.
BUt they don’t get acceptances at those levels so what is the real point? To give yourself bargaining room? Ok, I get that but negotiating with a bank is not like negotiating with another person.
Banks have pretty firm guidelines and they don’t have to make a deal if you don’t meet their guidelines.

In my experience, it makes more sense and is more efficient to make your original offer much closer to where you know the bank is realistically going to end up (82-88%) and then stay firm to your bid.

Banks and loss mit people don’t like dealing with low ball offers, they don’t do the back and forth negotiating well (they drag their feet because fo the paperwork and red tape involved) and entering lowball offers just makes a long process MUCH longer. (it doesn’t get you lower prices in the end)

I submit you can close more deals and make more money in less time if you toss out this notion of making offers at 50 or 60% of value. Obviously you usually don’t know the BPO so you can’t cut it too close on your offer or be too aggressive; but start out at a legit, realistic level and the loss mits will take you more serious and move faster for you.

If you were a loss mit who had 500 files on my desk which ones would you work on? The ones bidding 60% or the ones bidding 80%?

I agree with eric3. The gurus of SS have us stuck in the mindstate of offering 60% of the BPO and thinking that we will get that. The 60% offers is what prolongs the process and enduces the back and forth. Short Sales is a very profitable buisness, if done right. You don’t have to make 50-60 thousand on every deal you do. When it comes to real estate, time is an investment. Make yours well spent.