Need info on short sale

[Brian - L.V. 0]

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.

Thanks a lot. That really helps. Trying to gather as much information as possible so I'm more prepared on what to do next time. I realize that pre-forecloses can be risky if you don't do your due dilligence and then some, so it's not something that I'm going to actively seek out. If it comes to me though.........

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.

Oh ok, sorry. Sounded like you guys do some deals together. Ed seems like a pretty entertaining guy from that audio.

 

So with using part of your spread to give to the buyer, do most lenders approve of that (meaning they allow buyers to be given part/all of the down payment)? Do you have to do anything extra to be able to do that, like extra paperwork, or is it just an instruction that you give to the title company? Does the buyer receive it as cash or just a deduction on the HUD? Thanks for your help, Jonathan (or anyone that wishes to chime in)!

[Jonathan RexfordFL 8]

In last response. Ed & I did a couple of deals in the past. That is it. Now and regards to the spread and giving it to buyer. Lets be clear and mention that its not Down payment money as its assisted in closing costs which is allowed by lender. Some lenders allows up to 6% towards buyers closing costs.

 

When I cancel the agreement with seller it allows Seller and Buyer go into contract at FULL price with seller paying X% towards buyers closing costs. Seller still keeps same NET and maybe a few more bucks as bonus.

[Brian - L.V. 0]

That is it. Now and regards to the spread and giving it to buyer. Lets be clear and mention that its not Down payment money as its assisted in closing costs which is allowed by lender. Some lenders allows up to 6% towards buyers closing costs.

That makes sense. I didn't think that most lenders allow the seller to give the down payment to the buyer. When the money's for closing costs, that's ok though. Ok.

When I cancel the agreement with seller it allows Seller and Buyer go into contract at FULL price with seller paying X% towards buyers closing costs. Seller still keeps same NET and maybe a few more bucks as bonus.

So if you have say a 15% spread on the option and you give 5% to the buyer for closing costs, you receive 10% from the seller as an option release fee at closing. Sounds easy enough. Is it possible to do more if need be, provided it's called presented as being for something other than closing costs?

 

Maybe I just need to listen to the teleconference again, but I'm trying to understand how I can offer down payment assistance/seller financing like Ed talked about on the call. Or maybe I just misunderstood him. Trying to find ways to market houses so they sell as fast as possible, even if it means rebateing some of my profit to the buyer.

[Jonathan RexfordFL 8]

Down payment assistance is (Closing costs) It is money they do not have to come up with. The deals that we did together the people had 100% financing. We had them give us a grand to make sure they were tied to the hip. But I want to tell you something.

 

100% financed deals tend to blow up more than loans that have some meat from the buyer. I had three brand new homes and we sold each home with contracts in hand with deposits TWICE. People FLAKED. The last one ED sold for me the guy put 25K down and even that was a flakey buyer.

[Brian - L.V. 0]

Down payment assistance is (Closing costs) It is money they do not have to come up with. The deals that we did together the people had 100% financing. We had them give us a grand to make sure they were tied to the hip.

I was thinking about the money they give to the lender, but you're right. You're helping them pay the upfront out of pocket costs associated with buying the house.

100% financed deals tend to blow up more than loans that have some meat from the buyer. I had three brand new homes and we sold each home with contracts in hand with deposits TWICE. People FLAKED. The last one ED sold for me the guy put 25K down and even that was a flakey buyer.

Wow, it's surprising to see that people flake out with that kind of money on the line. Did you have to give the money back, or was it considered part of your liquidated damages for not closing on the house? The type of buyers that I have in mind to target are the ones that have a decent amount to put down (maybe 5% or so) but not enough for closing costs. Help them get into a house today instead of having to wait another six months to save up $ for closing costs, ya know?

[Jonathan RexfordFL 8]

The guy with the 25K did buy the house. On some occasions I do give the money back. Most of the time its tied up with 1K down. 5% is good.