Quick Question About Short Selling PRIVATE Individual.
I will be typing up a big post about this deal in a day or so, and I will link to it when I have finished, but first I have a quicky for you :
The property in question has two liens - one big one from a bank and a 12k note held by the previous seller. I'm assuming the 12k note was drafted to allow the current owner to buy with no down payment.
Current owner is 4 months past due on bank note, and current on the private note. I am buying the property sub-2 from the owner and would like to short sell the private note.
How should I approach this note-holder? Will it be easier or harder to do this short sale?
My understanding is that the private note holder has everything to lose and nothing to gain by holding out for the full value. How much should I offer? What paperwork do I need? (I've never short-sold before. :cry: )Should I mention that the current owner is facing foreclosure???
I'm not sure how to proceed with this. Please, someone, help me. :cry:
Your post doesn't indicate what might be the most important element of this (and all) potential short sales....
The property's as-is, fair market value
The as-is, FMV is the Beginning from which all shorts are deemed to be feasible... or a waste of time.
[addsig]
Heheh... Sorry about that.
Fair market value on the home is around 120-130k.
Lien number 1 is for 103k.
Lien number 2 is for 12k.
Short Sale Pro is right , you have to determine FMV to see if there is enough equity to make it worthwhile for you. What I am curious about is; does the 2nd holder know that the first is in arrears, and if so, what would stop them from letting it go to foreclosure to save the house for themselves. Or better yet, ask the bank to discount their first?
"around" is OK for horseshoes and hand grenades... but that $10K range will be the determining factor on how the junior lienholder will proceed.
If the junior is confident that the property is worth $130,000, or even (around)more.... then the junior would have nothing to lose by bidding at the sale, &/or joining the foreclosure as Plaintiff.
Even if the junior's security interest is extinguished at sale, it can still enforce the private promise to pay..... deficiency judgment, wage garnishment, etc.
They might not want to go thru the process, and gladly accept a short payoff. Try to purchase the mortgage via an assignment, placing you in their shoes.
As you would with any short sale proposal, project their anticipated costs to proceed.... (attorney's fees, court costs, etc.)
[addsig]
The current owners bought it in August 03 for $122,000. The home is 2700 square feet, absolutely BEAUTIFUL, and is on 5 pristine acres of land. It even has a nice pond in the back. It is a 3/2 with a basement and 2 car drive under garage.
Fair-market value would be right at 130k.
The resident is 4 months past due on the 103k lien, and is current on the 12k note.
The holder of the 12k note is the individual who owned the home prior to the current resident. I'm sure he has the note as an income stream in lieu of a down payment.
I doubt the prior owner even knows that the current owner is past due on the mortgage.
It is a private person - that's why I'm not sure how to proceed with the short sale. I'm pretty sure I could handle a loss-mit team at some bank somewhere, but I'm sure it would be different talking to a private person.
It's like having a black belt in karate and getting your butt kicked by the guy who just swings wildly. Against a bank you know what to expect but against a novice you are constantly hit with curveballs.
I've already done equity analysis and stuff like that - if I can short sale this second note then there will be plenty of equity for me to make this a worthwhile deal.