First Deal, HELP!!
I am a newbie at REI all together but have decided to learn the SS process because of the lack of competition in this area of the market. I have recently purchased and read numerous books on SS (including “A Short Sale Primer” by the Short Sale Pro).
I have found a brick home that was built in 1968 and is in fairly good condition. The homeowner has a first of 102k and a second of 18k (she owes a total of around 124k with penalties and late fees). She is three months behind on both and has until the 24 of June to have the first current of they will foreclose.
The homeowner is going through a rough time financially (she lost her job 6 months ago) and can’t bring the loan current. She is willing to allow me to attempt a SS in order to save her credit from any further damage.
The house appraised for 124k when she purchased it 2 years ago but the comps that I can pull now are around 110k to 120k. I am guessing that the repairs would not be more then 10k but I am not sure how to get a solid figure on these. Should I get the home inspected and then have a contractor give me an estimate on what needs fixed?
From everything that I have read this sounds like a good SS candidate but this being my first I am just not sure…
Anyone have any ideas, comments, suggestions???
Thanks in advance for your time,
Rich
Take plenty of color pictures, close up to the items needing repairs. Concentrate on big ticket items including structural problems, leaking roof, sagging floors, flooded cellar, etc.
Make sure that you impress upon the homeowner that you need to paint the home in it's worst possible light. Any little tid bit of info will help later on.
Place calls for estimates well in advance. Try to schedule a time that is convenient for the Homeowner to meet several contractors... so that you can get a handful of estimates... listening carefully to each contractor's insight as this info will help youlater on, too.
If the first is an FHA insured loan, you'll have to be prepared to negotiate the junior lien down to $1,000, or, be prepared to purchase the lien for cash (via an assignment) at the best price you can.
[addsig]
I don't know how concerned people in other states are, but also be aware of lead, asbestos, and mold, which can cause rather expensive rehabs.
Also check w/ a brick mason or the GC on the condition of the brick and mortar joints.
"I don't know how concerned people in other states are, but also be aware of lead, asbestos, and mold, which can cause rather expensive rehabs.
Also check w/ a brick mason or the GC on the condition of the brick and mortar joints."
An excellent suggestion(s) . Water and air quality, too. I usually carry a lead swipe test, water test kit, a mold test kit, and a radon test kit. I've also added an electrical testing device that indicates proper voltage, crossed wires, etc.
These kits are available with PDQ lab test results. Usually, the entire screening can be less than $125.00 and well worth it if it will support your short sale proposal, if needed for an appeal..
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Short Sale Practitioners can't predict, or guarantee results... but can take steps to insure the likelihood for success....[ Edited by TheShortSalePro on Date 05/29/2004 ]
Great info! I just got back from meeting with the homeowner and taking a look at the house. I took about 35 pictures of everything from uneven floors to water damage (caused by a leaky roof, a shower that leaks and a garage that floods after each rain). I didn’t have any of the test kits that you mentioned but I will get them and have them ready for the next one. Great advise, thank you!
Both loans are held by the same mortgage company (Homecomings Financial). They are both conventional uninsured loans.
Should I keep the current percentages (%85 for the first - 102k and %15 for the second - 18k) and once I am able to determine the perceived FMV (taking into account the items that I listed above) I would offer %85 to the first and %15 to the second?
Should there be a discount percentage off of the perceived FMV, say %85 and then split that between the two loans?
The homeowner has already filled out and faxed a workout application back to the mortgage company. I guess my next step is to fax the Release Auth form and prepare a proposal.
I basically got the answer to my question by talking to the mortgagee. They want one proposal with one offered amount but just asked that I put both loan numbers on the proposal. I guess that will work??? I guess they will then workout what each lender gets on their own.
I do have another question though…I am suppose to meet a broker at the property for an internal BPO within the next few days. I can’t seem to get any contractors out to give me an estimate. Can I call a firm that strictly does estimates for insurance companies and offer to pay their standard fee for an estimate of repairs? If not what are some other options?
Rich
Do you have any RE rehab friends that can help you come up with numbers?
As you probably know the BPO is your best weapon in the SS process. Have comps ready for the person with selling (not asking) price circled, days on market circled, condition of house circled. Point out very thing wrong with the property. Point out suspected things wrong (termintes, mold, foundation problems, septic problems, well problems, roof replacement, etc). Do no clean it up inside nor out.
You can just say things to the BPO person like "I had a general contractor frien of mine walk through the house with me and he said ..." now of course use some common sense. Look under the sinks and behind the toilets to see if copper is still being used. The wiring is almost impossible to tell.
++ house has original aluminum wiring - rewire is about 4k
++ he walked the roof and is soft in several areas - reroof with wood work is about 6k
++ house has original copper plumbing - replumb is about 4k
++ drywall repair from the electric rewiring and replumb is about 2k
++ new bathroom is about 2k
++ new kitchen cabinets and counters is about 3k
++ interior paint is about $1 a sf
++ exterior paint is about $1 a sf
++ flooring is about $4 a square foot, wood might be more
++ septic problems are about 2k
++ windows are about $200 a peice
Would you re-wire AL wiring?
I don't know if TN does this, but here you can hire a home inspection service to rep you.
I used some, slightly high, ballpark numbers to show the value of repairs and got the 3 lowest comps that I could find. I placed these items in a document, all nice and pretty, and gave it to the broker when she came to do the BPO. It came back with a $27,000 dollar reduction in FMV .
I am now getting my proposal together to be sent in but I have a question…The mortgage company did not ask for a HUD1, Settlement Statement, Signed Sales Contract with the owner or any thing. Should I include these items or just send my offer and wait for the mortgagee to request them?
:-D
I submitted the proposal without a HUD1 (because honestly I did not know how to fill it out…remember this is my first deal) but shortly after they got my proposal they requested a estimated HUD1. A big thanks to TheShortSalePro for pointing me in the right direction. I went to a local title company and they were more then happy to help me out in return for future business.
It is so exciting to build my team of professionals and watch these relationships grow. I now have a Broker, Title Company and a Banker that I can call at any time with questions. I am still looking for a few more…contractor, home inspector, etc, etc…
Everything is submitted to the mortgagee, now the waiting game begins…
Rich
Just wondering: How did it go with the SS?