What To Offer 2nd?
I am currently working on a shortsale situation with the following liens and amounts:
1st--7500 (Foreclosing on property)
2nd-- 43,000
3rd-- 8500
4th-- 6700
IRS lien-- 13,000
State Tax Lien-- 11,000
ARV of house--> 100k
How much would you offer the 2nd for a shortsale?
Also, the 1st would like a valid Purchase Agreement to cancel the sale. What amount would you put in the contract as the sales price?
Thanks
Cole310,
If I were you, I'd contact the second, the third AND the fourth!
I offer $1000 to each of the Junior Liens and then let them counter offer.
In some states Junior liens are wiped out at the foreclosure sale and on (foreclosure date) they will get nothing. (You'll have to check and see if your state does this).
You are smart, a short sale is the best way to do this deal!
Hope This Helps!
Mrs. Meltzer
Just beware of IRS liens because although you might be able to shortsale them, dealing with the IRS can prove to be a lengthy and time consuming process. You might want to reconsider this deal based on this fact alone. If you can get them (IRS) to come to agreement on terms with you in a timely fashion, good. Otherwise, good luck with them.
You do have to contac ALL lien holders as when one files a foreclosure, all the rest are notified so they ARE aware of the situation to an extent. This is because if you end up buying the place thru shortsale, the junior liens won't be wiped out as they would in a foreclosure sale so you will be taking them on.
Hope this helps.
I am currently working on a shortsale situation with the following liens and amounts:
1st--7500 (Foreclosing on property)
2nd-- 43,000
3rd-- 8500
4th-- 6700
IRS lien-- 13,000
State Tax Lien-- 11,000
ARV of house--> 100k
why would the secound third and fourth discount what is the condition of the house the secound will proubably buy out the first position or bid that much at auction to cover them selves you they
what is the reason they would take a discount
I think that I would probably verbally contact the state and the IRS and see what they say. But I would figure full value on those two. Generally at foreclosure all junior liens are extinguished. The two under 10k I would offer $500 a piece on as they will get nothing and will not bid on this property to protect such a small interest in the first place. The foreclosing first probably 35k and the second 10k or less. Whatever I did I wouldn't be in this more than 60-70% of FMV. I would do due dilligence and give a comprehansive packet to the first and a partial to the second showing the poor condition of the house etc.
If the first or second bid on the property they would have to pay the $24,000 tax lien on the property and this would take the first well over FMV and only further put them in the hole. The second doesn't have a prayer, not only would he have to satisfy the senior position, he would have to also pay the $24000 in tax liens.
This is a mess that only the first would come close to coming out on out on in a best case scenario, and this isn't that (their $75000 loan + $24000 taxes= $99000 then they would need to pay attorney and realtor fees of approximately $7000 to finish foreclosure and sell it as well as carrying costs for the 2-6 months it would take to close on the property. This would again leave them upside down after a whole lot of hassle!).
So, in short. I would lowball the heck out of the second maybe even 5k?
This is a deal where everyone but the taxing authorities are knowing they are going to get screwed on. Make a lowball on everything, don't go over your last best figure, and if you do it e-mail me and let me know how it went
Good Luck!
[addsig]
StockPro,
The first is actually $7,500; not $75,000. This is where I'm scratching my head because usually the 1sts are more than the juniors. Does this change your opinion on offering 5k to the 2nd?
Thanks
if the second mortgage bids at the sale they would bid what they are owed plus the first. the irs and state lien would not be entitled to anything from the successfull bidder at auction. they may have a right of redemption, which means that when they redeem they would have to pay exactly what was paid at auction + interest to the succesfull bidder.
therefore i dont see why the second would short sale unless there is extensive damage to the home. the 3rd and 4th would propably accept less then they are owed. the irs and state would also take less but the time factor to negotiate with them could kill the whole deal.
Oooh the IRS, when you bring them into the game they play by their rules.
Mike