How Short Will Banks Sell?
I'm involved in a short sale and am bidding with the bank. Is there a general rule as to how low to go with offers after you've sent the "permission to review mortgage letter" and the bank actualy starts talking with you? Example, in this case the home is worth after rehab about 115K , there is 89K owed plus all back payments/penalties comes to 103K.
I mailed a contract for 50K, bank came back at 65K
we are probably going to settle at 60K. It goes to Sherriff sale Aug 8. How short are banks willing to go off of whats owed, or is it different in every situation?
Thanks J
Not only is each situation unique, each lender is diffrent and each region is diffrent. Here in Cali they will accept arount 92% of the BPO. But even that varies.
My rule of thumb is that I need to create at least $30,000 in equity from every short sale that I do. With that equity I can either turn it into cash or keep it as equity by financing the deal myself. I will typically look at how much the current mortgage is and discount it based on several factors which include comps, condition of property, and how much I feel it's worth. Believe it or not but your negotiations will actually get better because you are not relying on a formula but actually what your margins need to be as an investor/business owner.