Need info on short sale

[CES 0]

Owner says they owe 56,000 in princple

They have a ARM that started around 400, now is almost 700

3BR/1.5 BA

1780 SQFT

Built 1925

comps run around 60,000

repairs around 8 to 10K

She told me she talked to the lender about doing a short sale and wanted to know if I would negotiate with the lender and buy her house. She stated that she just wanted out.

I spoke with the lender and he said he was scheduling a BPO and then could entertain offers/negotiate.

I am new, but as I understand it I would have to have the verifiable funds in which to purchase from the lender(a cash sale), then try to do something with the property.

From what I've researched I can't wholesale this property because the lender will not do anything with an assignment clause.

 

I don't want to pass up a deal, but I would like some confirmation.

If I am missing something please fill me in.

 

If I can do something here how do I set this thing up.

Thanks

[Jonathan RexfordFL 8]

Buy it with hard money and rehab it and sell. I have never had them ask me for proof of funds. But what I have done is buy the property into a trust and let the investor take over the trust as part of the short sale.

 

What are you planning to wholesale it for?

[Craig 0]

Owner says they owe 56,000 in princple

They have a ARM that started around 400, now is almost 700

3BR/1.5 BA

1780 SQFT

Built 1925

comps run around 60,000

repairs around 8 to 10K

She told me she talked to the lender about doing a short sale and wanted to know if I would negotiate with the lender and buy her house. She stated that she just wanted out.

I spoke with the lender and he said he was scheduling a BPO and then could entertain offers/negotiate.

I am new, but as I understand it I would have to have the verifiable funds in which to purchase from the lender(a cash sale), then try to do something with the property.

From what I've researched I can't wholesale this property because the lender will not do anything with an assignment clause.

 

I don't want to pass up a deal, but I would like some confirmation.

If I am missing something please fill me in.

 

If I can do something here how do I set this thing up.

Thanks

 

Why would the seller want to do a short sale? Does she know the results of this?

 

At most get the lender to do a short sale (must be a good one with these numbers) to you with a hard money lender then refi or sell within 6 months or ASAP. If you want I have good hard money lender I can recommend if needed. Email me.

[CES 0]

Thanks for the replies

 

The H/O says that they have found another place and just want to be out of there. I suspect that they have other priorities. She told me that they are going to move out around the 15th of this month. They haven't paid June or July. I get the impression that they are probably going to rent something more affordable.

 

She originally talked to an agent about listing the house and the agent reccomended that the H/O do a short sale. She contacted her lender and asked about a short sale. According to her, he was willing to accept 40 to 45. She was made aware that she would receive nothing from the sale.

 

I spoke with the lender and he said he needed his BPO so he would know where his #s were. I talked with her this afternoon, and she said that the BPO happened Sun. I set an appointment with her for Friday and my intent was to sign her and have her sign a release of information form so I could then contact her lender and request their package.

 

My plan:

comps are around 60's

offer 29k or 30k no more than 35k

sell for around 39k or 40k

repairs are say 8 to 10k

leaves a good 15k to 20k to work with, minus repairs, a 10 to 12k profit

 

I am new, and really green. I wanted a straight foward wholesale deal, but this is what I've got right now.

So, I've decided to proceed cautiously and ask for a lot of help.

Don't know much about hard money lenders or refinancing.

 

Thanks, I appreciate any help or criticism.

[Jonathan RexfordFL 8]

As an investor who does alot of rehabs if value and repairs are as you stated I wouldn't pay any higher than 30K. If you wanted to wholesale it then you would need to pay less than 30K.

[transactionsengineer 0]

Owner says they owe 56,000 in princple

They have a ARM that started around 400, now is almost 700

3BR/1.5 BA

1780 SQFT

Built 1925

comps run around 60,000

repairs around 8 to 10K

She told me she talked to the lender about doing a short sale and wanted to know if I would negotiate with the lender and buy her house. She stated that she just wanted out.

I spoke with the lender and he said he was scheduling a BPO and then could entertain offers/negotiate.

I am new, but as I understand it I would have to have the verifiable funds in which to purchase from the lender(a cash sale), then try to do something with the property.

From what I've researched I can't wholesale this property because the lender will not do anything with an assignment clause.

 

I don't want to pass up a deal, but I would like some confirmation.

If I am missing something please fill me in.

 

If I can do something here how do I set this thing up.

Thanks

 

Forget buying the house. The person wants out so have her give you the home via Subject-To. This depends on the state you are in because some states will not let you sub-to anymore. If were to do this, I would have the current owner transfer her property into an LLC, claiming that it is being done for estate planning purposes so no taxes are required in the transfer. Then the current owner can sell me her LLC for $10. The LLC owns the home and the rights to the home. I would own the LLC and can sell it from the LLC at my leisure.

 

If you are still intent on doing the short sale, you will need to put together a package of comparables or have an appraiser give you a price based on lower comparables that go against the BPOs. The BPOs are usually higher and will get you a small discount on the notes.

 

Hope this helps you.

 

Daniel Ng, JD/LL.B

http://www.tradetheyen.com

[Jonathan RexfordFL 8]

Forget sub to. This deal does not make sense buying sub2. Just have her deed you the house and do a short sale. Its not that difficult. It is still legal to buy sub2 in all 50 states. NC is having an issue right now, but that mainly is with Land Trusts and such.

[Brian - L.V. 0]

Forget sub to. This deal does not make sense buying sub2. Just have her deed you the house and do a short sale. Its not that difficult.

 

A couple of quick questions on this to make sure I understand. You have the seller deed you the house, but since the mortgage is still behind, the lender may entertain a short sale. Does the house have to appraise for less than is owed for banks to consider short sales (could you have a nice house where the seller just doesn't have much equity)? Is there any negative fallout for you as the investor if the house is deeded to you and still goes into foreclosure? Thanks!

[Jonathan RexfordFL 8]

Brian,

 

A few things about short sales. The house has to qualify. Meaning there must be an issue about the house and the debtor that cannot fix itself. Repairs, no equity, adverse conditions, marketing time and so forth.

 

New homes that have second mortgages are going to be good for short sales. Because most of them have either a 80-85% 1st and the balance of the 2nd its possible to get in real light.

 

I get the deed from seller because I do not want to do all the work and then find out that the seller deeded it to someone for a few more dollars than I am trying to buy it for.

 

There is a lot of work and time that goes into working a short sale. As part of negotiations I do not tell the lender I have the deed. If they ask I will tell. But it’s not recorded.

[Brian - L.V. 0]

The house has to qualify. Meaning there must be an issue about the house and the debtor that cannot fix itself. Repairs, no equity, adverse conditions, marketing time and so forth.

Ok, so would a seller that's facing possible foreclosure with little equity (5-10%) be considered an adverse condition to a lender? Or a seller that's been trying to sell for sometime and just wants out of a property, but has no equity?

 

New homes that have second mortgages are going to be good for short sales. Because most of them have either a 80-85% 1st and the balance of the 2nd its possible to get in real light.

That's because they are pretty much 100% financed with the seller having little if any equity, right? In your experience, are lenders willing to do a short sale on a house with no equity that doesn't really need repairs, and isn't behind on the payments just because the sellers can't get what they owe? Just wondering 'cause I had a property that fell into my lap at the beginning of the summer with a situation similar to that (seller was behind on payments though).

 

There is a lot of work and time that goes into working a short sale. As part of negotiations I do not tell the lender I have the deed. If they ask I will tell. But it’s not recorded.

Makes sense that you want to secure your position. Would you have any liability should the house go back to the bank since you hold the deed (provided you can't work a deal with the lender)? Thanks for your help, Jonathan!

[Jonathan RexfordFL 8]

Ok, so would a seller that's facing possible foreclosure with little equity (5-10%) be considered an adverse condition to a lender? Or a seller that's been trying to sell for sometime and just wants out of a property, but has no equity?

 

Answer: That would not be the only reason. To work a short sale needs to have a compound issues and alot depends on lender.

 

 

That's because they are pretty much 100% financed with the seller having little if any equity, right?

 

Answer: It works when a 2nd mortgage is in the mix. But as I said in answer 1 it depends on the lender.

 

 

In your experience, are lenders willing to do a short sale on a house with no equity that doesn't really need repairs, and isn't behind on the payments just because the sellers can't get what they owe?

 

Answer: let me answer it this way because the answer is the same as above. In my market and yours currently we have an over supply of new homes. Our average marketing time is running about 6 months. If you can show the lender the average marketing time (they already know this) and the amount of inventory that is listed along with the BPO that has already been given then you can paint the picture.

 

 

 

Makes sense that you want to secure your position. Would you have any liability should the house go back to the bank since you hold the deed (provided you can't work a deal with the lender)?

 

Answer: No. I make it clear that if I cannot get this done they are COOKED. I do have ways to extend the foreclosure process in my state if I get in early.

 

HTH

[Brian - L.V. 0]

Answer: let me answer it this way because the answer is the same as above. In my market and yours currently we have an over supply of new homes. Our average marketing time is running about 6 months. If you can show the lender the average marketing time (they already know this) and the amount of inventory that is listed along with the BPO that has already been given then you can paint the picture.

Ok, so it basically sounds like it just depends on the lender's willingness to make a deal. Sellers have different situations and lenders take that into account on a case by case basis, where one lender would jump at an offer to avoid foreclosure another may not.

 

Two questions, you're average marketing time is 6 months or that's just in general for your area? What's the BPO? Thanks!

[Jonathan RexfordFL 8]

Our marketing time has shifted to 4-6 months. We were super hot just like yall were in Vegas. BPO is Brokers Price Opinion

[Brian - L.V. 0]

Our marketing time has shifted to 4-6 months. We were super hot just like yall were in Vegas. BPO is Brokers Price Opinion

Yeah it was pretty crazy there for a while. Houses selling for 10% above asking price the first week and everything. So part of the package that you'd submit to a lender for a short sale has to include an approximate market value from a broker? Would the listing price be the same thing? What if it's not listed? Mainly wondering since I've had a couple sellers contact me recently who really need to sell, but have little to no equity and are barely making the payments.

 

I didn't think your marketing time was that long. I'm almost done listening to the last teleconference recording and am interested in the seller finance technique your partner (sorry didn't catch his name) was talking about. The jist of it is getting a property at a good enough price that allows you to rebate part of your spread to the buyer as down payment assistance, is that right? Sounds really interesting.

[Jonathan RexfordFL 8]

Yeah it was pretty crazy there for a while. Houses selling for 10% above asking price the first week and everything. So part of the package that you'd submit to a lender for a short sale has to include an approximate market value from a broker?

 

ANSWER: The lender will order the BPO. You have to make a case for the lender to accept the value. They will order the BPO and then make the decision.

 

Would the listing price be the same thing?

ANSWER : NO

 

What if it's not listed?

ANSWER: With some lenders this is a condition of short sale.

 

Mainly wondering since I've had a couple sellers contact me recently who really need to sell, but have little to no equity and are barely making the payments.

 

I didn't think your marketing time was that long. I'm almost done listening to the last teleconference recording and am interested in the seller finance technique your partner

WE ARE NOT PARTNERS. HIS NAME IS ED

(sorry didn't catch his name) was talking about. The jist of it is getting a property at a good enough price that allows you to rebate part of your spread to the buyer as down payment assistance, is that right? Sounds

really interesting.

 

ANSWER: That is one way.