SS With CW and B of NY

Hey everyone, just looking for feedback on this one in Tucson, AZ (could be my first deal).

1st: Bank of New York (serviced by Countrywide) ~$178k
2nd: Countrywide HELOC ~$47k

Other liens: unknown at this point.

Total: ~$225k (I received this rough number from CW collections, they said it could be a bit more. And I’ve got the owner’s latest statement on the 2nd.)

Repairs: $5k to $10k (the place was built in August/September 2005).

3 bd / 2 ba, 1600 sq ft, 1 car garage, 2 story.

The home is less than 1 year old. The roads for that subdivision don’t even show up on Google maps, Yahoo maps, Mapquest, or my paper AAA maps. Comps are a bit difficult to make out because the market in Tucson has already flattened, and has even headed down a tad (people are already reducing prices to sell). I’m trying to get the builder to give me prices on the new homes in that sub, but they haven’t gotten back to me yet. I figure the builder is probably offering the best price since they’re more in tune with the market and want to sell fast to make as much money in as little time as possible.

I might say that comps are in the $205k to $215k range. There’s one with the same exact floor plan and lived in for only 2 months listed at $214k. Others that are 1200 sq ft are listed around $190k. I can’t find sold comps for some reason … I might have to ask a realtor to do a CMA. But if I were to do this deal, I would run the numbers with me selling at $199k.

I’ve collected data from trustee deeds issue in April 2006. Using comps on those properties, I might be able to convince the 2nd that the usual % bid at auction in Tucson will lead to them getting wiped out entirely. And in doing so, I could offer them something small like $1k.

Then, my strategy on the 1st would be to convince them that they might barely be covered at auction. But if they aren’t - the repairs, preparing it for sale, agent commission, closing costs, etc would bring their net down below $178k.

So if I could reach these numbers, it might work:

2nd settles out at around 4% = $2k
1st settles out at around 90% = $160k

Total buy = $162k
Buy closing costs @ 5% = $8.2k
Repairs = $5k
Hold $162k @ 7% for 3 months = $3k
Sell closing costs @ 5% =$10k

Net Profit = $10.8k

What’da think? Seems a little slim to me, but the house really doesn’t need much work. However, if something pops up like termite damage or something, a $5k to $10k repair could sink the deal. Maybe I could get the 1st to settle for less than 90% (although $160k is still 80% of $199k, so that seems pretty low already) then it might be better. Perhaps the 5% closing costs are too high.

All comments are welcome.

I had a SS rejected by CW. Financed by B of NY.
The appraisal was at 318K.
The repairs were at 5K.
Their payoff was at 312K.
Our last SS offer at 293K was rejected.

The kicker is that the SS dept talks to the REO dept and
the properties in the neighbourhood sell for more. They
figured that taking chances in the auction is worthwhile.
Moreover, my location is a hot one.

If your location is not a hot RE market, i would also have
the 1st discount the broker fees as well.


Sorry if I’m being a bit dense, but to which broker fees are you referring?

Tucson has been hot, but it has flattened over the past 6 months. I think this is where I need to present a convincing argument.

For 11K I think you should be doing something else like wholesaling. A SS is to much time and effort for 11K. People might kill me for saying that but its my two cents. Heck…you even said it. Its too slim of a deal.