Bank Shortsale Criteria
A bank has told me that when doing a short sale, they need to net 82% of the appraisal or BPO price, but my contract must be for 95% of the appraisal price. I'm not exactly sure what they mean by that, can anyone clarify? It would seem to be one or the other.
I would suspect that the lender is just leaving room to pay the real estate sales commission and some seller closing costs.
Hence, the "net" is less than the contract price.
I would agree with Dave T. But that doesn't mean that you can load up with fees.... and remember that the Seller is to receive zero proceeds from the sale. If 82% net is their bottom most threshhold, give them 87% .... the loss mit rep would more likely support such a proposal to the decision making individual (or body) since it would make him/her look like a better negotiator.
I just dont get how I can get from 95% to 82% or whatever, without making up bogus fees on their side of the HUD, and what difference would it make Id still be paying 95% wouldnt I?
first off, those numbers are NOT concrete! EVERYTHING IS NEGOTIABLE! SHOW the bank the contract for sale and proof of funding, to entice them into giving up the property on slimmer terms. SHOW them not only the holding costs, but their economic loss due to their reduced ability to create loans (some banks must hold an additional 6x the mtg amt in their reserves as a result of holding real estate!). Also you MUST get the BPO DOWN! Head off the broker so that you can show him the problems with the property, any comps that you have had done, and any rehab estimates. give him the FMV (as determined by YOUR END) on a silver platter! SALE him on that low FMV! If you do these things, you should come out ahead. Even if you CANT convince the bank to go below 95% FMV, you can at least get that FMV down to a value that allows you to profit.
Surely there are so me repairs to the property that need to be made? There are various prices for contractors to do the work. Get a higher bid for the work that needs to be done.
I know I could find some if I were looking at it.
[addsig]
EXACTLY!
On a current short sale project, I went through the home and made a list of EVERY thing that needs repair to get the home into "sellable condition". I am also having the seller go through and take pictures of ALL the blemishes in the property. I Should be able to pull over 30k-40k off the BPO with these rehab costs alone!
-Brandon Richardson-[ Edited by richar18 on Date 09/02/2003 ]
The stated 82% is probably written in stone. Sounds to me like this is an FHA insured first, right?
In the case of FHA or VA insured loans, their criteria isn't quite as flexible as some would have you believe.