How Would You Structure This?
I put this in the short sales forum, but I think it should really go here...
I was contacted by someone in preforeclosure...
Goes to auction Feb 27th
$5,000 behind in payments
$2,000 attorneys
Listed with a realtor at $215,000
first mortgage: $154,000
second: 30,000
looks like there's equity here. Not sure what next step should be. I was initially thinking of doing a short on the first,but with the equity, I don't think the bank will take it. Maybe short the second?
I've done a ton of reading on this (sub to, short sales, this web site) but now I have stage fright and I guess and I'm not exactly sure what the heck to offer here or what to do next.
154k loan
7k attorney + back
30k second
10k fixup
your up to 201k
If I thought about this house it would be only as a rental.
I would offer back payment and leave. I don't want to be negative, but a better approach is to write up a net equity worksheet and what ever is left over after EVERYTHING should be split. That worksheet, including fees to sell would have little or no profit. If you have cash and time, you could offer back pmts only, get them moved out and lease option to someone else to get your cash back.
[addsig]
After reading you post again, I have one more thing to add. List price don't mean Jack. You should comp out your properties using a service such as dataquick 100/mo. How would you feel if you found out that the last house in the track sold for 200k?
Yeah I'd have to agree. If you can get around the D.O.S. clause or the acceleration clause, takeover using sub2 THEN pay the back payments. Depending on your location, lease/option may be the ONLY option. Offering a home for rent at $1800/mo can be difficult in some parts but offer the American Dream and it may not seem like such a burden. Do the comps first though. Use the pro-formanator tool and see if it can be profitable. $215k may be too much and we all know that its difficult to sell an OPT (Over Priced Turkey). Good luck.
For arguements sake, I will tell you what to do next when you find the same deal but COMPS out at 250k. Fill out net equity
lets say 201k total owed + fix up
10k to sell/misc
250-211=39k
Tell the people you could get them out of their situation and put 19,500 in there pocket. If thy agree, write up the offer and wait 5 days to exchange any money (the law), at least in California. Now, write the deal like this. Back payments now, 2k now to help you move out, 2k once you are moved out, remained when I sell. Once that part is over, you need to get the trust deed notorized by whom ever/EVERYONE on title. Hope that gets you a couple steps further.
You guys are great! Thank you. I still feel like an idiot with this stuff. I guess I just gotta keep asking questions and moving forward!
Again thanks,
Paola