Who's crazy, me or my negotiator?

Foreclosures, Short Sales, Tax Foreclosures
1

I use a negotiator to work my deals so I can concentrate on bigger and better things. I’ve done short sales before so I know how the process works however it’s been awhile and I know things have changed.

He said a few things today that have not been sitting with me too well. Seems he is negotiating for the bank not the investor.

  1. So he says I shouldn’t know what the BPO is and that the bank will not disclose the information anyway!

  2. The property is worth 185k ARV and there is 50k in repairs, want to put in an offer of 95k no more than 110k - he says even 110k is too low

    a. too low because the lender knows an investor is buying and the contractor estimates don’t mean anything because the investor most likely will do their own work - so a 50k job is probably only 25k (so he says)

    b. the lender will make more money taking this house to auction with only a 110k offer.
    c. we’re making too much money with a 110k offer
    d. if the homeowner doesn’t have a hardship then the lender won’t accept.

NOTE: With holding costs, repairs etc. who knows what the ultimate profit will be.

I’m in a huge disagreement with this information. The investors I know as well as myself, don’t do most of the work ourselves, we have other things to do.

If I don’t have a BPO, how would I know the most reasonable offer to put in. When doing our own negotiations, we’d ask the lender if there was a BPO and if so for how much and it wasn’t an issue. Then we were able to put in a reasonable offer and with back up.

This house is a mold hole and everything has to be redone. Everything has been removed down to the studs.

As for the hardship, well long story. Went into foreclosure do to a chain of issues with the house. Squatters went in and distroyed the place. People were coming into the home and running the water (have no clue why) but 40,000 gallons were used in one month - leaving her with a 800.00 water bill. This flooded the place and ultimately started a major mold problem. She then finds out there is 40k in damages just to make the home habitable, she couldn’t afford it. With the water bill, city fines and other bills, she could no longer afford the home. Is this not sobby enough of a story??? It’s not the best neighborhood. 80% of the SFH homes are rentals. It’s a low income neighborhood with a mix of apartment complexes, duplexes and tri-plexes. Ok I’ll stop at that.

Questions, comments …

I think the negotiator is out of his mind but maybe I am and maybe the bank would want this house. lol - Who’s crazy here.

2

If he isn’t doing as instructed, why do you bother to keep him (and I assume pay him)?

3

Good question. I don’t tend to instruct him. He is supposed to do what he knows; to negotiate the short sale. Problem is he doesn’t seem to know what he is doing? :banghead I have decided to “fire” him but I was looking for some feedback on the information he had told me.

4

disregarding totally what he is saying and focusing only on the sob-story you shared with us, i am personally trying to figure out WHY ARE YOU TRYING TO BUY IT?!?!?!?!?
Honestly i think $110k is TOO MUCH based on all that has happened to this home and from what you have shared this should be a slam dunk deal to negotiate because there is nothing to substantiate the lender not wanting to get rid of it…

this is one that i would personally handle (provided you really want the deal at a good price) and i would clearly convey the story with as much evidence as possible and submit my package and once complete and funded i would send a copy of the entire package and proceeds to the negotiator informing him that is how deals are done…

5

You are right, 110k is too much. My original offer was 85k and he said that was way too low - he said the bank would be happier taking it to auction; they’d make more money. HUH. So I just told him, I wouldn’t go more than 110k if I had to. But really I want to offer the 85k and see what the bank comes back with. Time is running out and all the paperwork has been done with him, kind of puts me in a pickle. Trustee sale is Feb 21st too.

After repairs and holding costs assuming everything goes smoothly - about 3-5 months or so to rehab and resell. About 25k left for profit. But he said offer too low, profit too high. To me, just send the darn offer in with all the back up and wait for the bank to decide. I wasn’t comforable with the “that’s too low” answer he gave me; he’s not the bank. But like I said, I could be crazy.

I’m screwed. :banghead

This guys been a negotiator for 10 years. :shocked

6

1So he says I shouldn’t know what the BPO is and that the bank will not disclose the information anyway!

True some Lenders will not tell you what the BPO price is that is why you want to go out and meet the BPO agent at the property, Now that bing said once the property is in the Negotiation stage you will always find out there price point on the property. I would ask for an interior BPO knowing the situation on the property that right there would justify the 50k.

The property is worth 185k ARV and there is 50k in repairs, want to put in an offer of 95k no more than 110k - he says even 110k is too low

[i][b]a.  too low because the lender knows an investor is buying and the contractor estimates don't mean anything because the investor most likely will do their own work - so a 50k job is probably only 25k [/b] [/i]

Bring up the repair costs to 75-80k this is something the bank is going to negotiate anyway start higher.

b.  the lender will make more money taking this house to auction with only a 110k offer.

While that also might be true look at the repairs and the mold issues that is why it is called an OFFER! And after you deduct the holding costs and legal fees they will net right around the 65k

c.we’re making too much money with a 110k offer

Not if you really look at the offer

d.if the homeowner doesn’t have a hardship then the lender won’t accept.

While so many think thats the case a good negotiator will argue the fact that the bottom line is the owner is not paying them. Regardless of the hardship

NOTE: With holding costs, repairs etc. who knows what the ultimate profit will be.

I’m in a huge disagreement with this information. The investors I know as well as myself, don’t do most of the work ourselves, we have other things to do.

(Finally something that makes Sense)

If I don’t have a BPO, how would I know the most reasonable offer to put in. When doing our own negotiations, we’d ask the lender if there was a BPO and if so for how much and it wasn’t an issue. Then we were able to put in a reasonable offer and with back up.

This house is a mold hole and everything has to be redone. Everything has been removed down to the studs.

Comp Value 185,000.00
Repairs $70,000.00 (We know the bank won’t do the Repairs so this will deduct off of price)

List price after Foreclosure 115k

FEE’S Involved

Holding costs $36,000.00 (House in that bad of shape will not sell in this area for 1 year @3k a
Month)
Attorney fee’s $12,950.00

Realtor Fee’s $ 6,900.00

Closing cost’s $1,500.00

Transaction fee’s $2,200.00

Total net $62,350.00 after Foreclosure Process

Please note that our offer of 85,000.00 will profit you as the lender $22,650.00 more then if you were to Foreclose on the property we look forward to receiving the payoff letter and that can be faxed directly to 555-1212 attn __________. If there are any questions about this offer please call 555-1212

As for the hardship, well long story. Went into foreclosure do to a chain of issues with the house. Squatters went in and distroyed the place. People were coming into the home and running the water (have no clue why) but 40,000 gallons were used in one month - leaving her with a 800.00 water bill. This flooded the place and ultimately started a major mold problem. She then finds out there is 40k in damages just to make the home habitable, she couldn’t afford it. With the water bill, city fines and other bills, she could no longer afford the home. Is this not sobby enough of a story??? It’s not the best neighborhood. 80% of the SFH homes are rentals. It’s a low income neighborhood with a mix of apartment complexes, duplexes and tri-plexes. Ok I’ll stop at that.

Good enough hardship

Have another Investor friend offer 72k then tell them “Now we have two offers one at 85 and one at 72k which one do you want to take?” Wait for an answer

If they say Neither ask for the Supervisor.

7

Is he only getting paid if you get together with the bank? That would mean he is working to get both of you together, not get you the best deal.

DB

8

He’s trying to sucker you into paying more and getting a spread on the negotiated short payoff with the lender. you pay the 110k, he pays the lender the TRUE short payoff and profits, you’re stuck with the piece of shit house.

I’ve used 3 short sale negotiators before deciding to do it myself. They’re all full of BS and will just try to screw you.

:bs :bs :bs :bs :bs :bs

9

Thank you all for the responses. d_sbrown, I’m not dealing with the bank - but I wish I had and left him out of it.

JasonG916, I would say you could be right - but he’s explained to me how to profit from this in a few ways. I’m not sure if I am buying or selling my interest. Originally the deal was that the seller would sign the property into a trust (me) and I would put in an offer, the bank would accept the offer then I would sell to my end buyer for a greater amount and do a dual closing - the difference is my profit. Though I agree, I think he is full of BS. :flush

As for inflating the contractor estimates. I don’t think my contractor would be interested in doing that.

BTW, just found out the lender is in Chapter 11 BK. Can I use this to my advantage? Or am I screwed.