What should I expect on short sale
A seller called me with a house worth $70,000 (after repair). She owes $37,000 on the 1st (current) and $33,000 on the 2nd (10 months past due). I got a release and contacted the loss mitigation department of the bank. I asked them what it would take to do a short sale. Someone told me that a bank would normally accept 10-20 cents on the dollar.
This would be my first short sale and I'm wondering what I should expect from the bank (what banks normally do in this situation).
The owner is trying to keep the 1st current but has suggested that if the 2nd doesn't do anything, she is going to walk. She filed bankruptcy about 2 years ago and the house was included.
Thanks in advance.
" A seller called me with a house worth $70,000 (after repair)."
The after repaired value is meaningless to the lender. What is the property's as-is, fair market value? That number, and the mortgagee(s)'s net recovery are the only numbers of any importance.
"Someone told me that a bank would normally accept 10-20 cents on the dollar."
It's possible, but each short sale proposal and settlement agreement is evaluated on it's individual merit.
Every mortgagee begins it's negotiation by seeking 100% of what's due.
Thanks for the reply.
Do the banks normally do an apprasal on the house to see what it is worth?
It needs carpet, some paint, some work on a roof over the enclosed porch and some work on the door to the fence.
If they agree to a short sale, then they will have either a full appraisal or BPO done on the property. You should read up on the recent posts on BPOs because they may price the property more than you want them to appraise it for.
Tanya
The mortgagee(s) will not 'agree to a short sale' unless and until they have a current BPO, and if the amount they are asked to eat is substantial, they'll order an appraisal to be performed by a licensed, certified appraiser.