Short Sale Deal Is Close....yikes!
This will be my partner and I's first deal. I am the brains (uh oh) an he is the cash and credit. He is a commercial pilot in another state. He calls every night for an update.
Deal is pre-foreclosure where homeowner has already deeded over the house to the other investor as well as given POA. Sale date is in May. Investor simply wants $1500 fee. No problem. Balance is 82k on house, no second. Clear title (per the investor) we will do our own title search to be sure. Investor has said that the bank REALLY does not want to this property and would be willing to take 80% of a FHA as-is appraisal. We are thinking that the as is apprasal will come in around 80k. HML is setup, we can use our own appraiser for that to and will do 65% of ARV appriasal. We are using same guy for both appraisals..he is a close friend. He understands what we are attempting to do. I have inspection setup for next week as well as the appraisals. Getting estimate from franchise handyman company to use for the SS packet. Hopefully it is high as heck. All the bank wants is P&S, FHS as-is appraisal and repair estimates. We are planning on offering 60k. Investor holding the deed said she thinks they will take it. Realtor friend has been by with me and thinks it is a great deal that we should be able to flip for 105K pretty easy. House accross the street is listed for more and is not better than what this will be. Also have a call in to my Ins agent to get Bldr risk insurance lined up. My mort broker has also confirmed that we can do a non-seas refi as soon as the repairs are done. No pre-payment penalty on the HML. Exit is to flip or LO is it does not sell. We will do alot of the work ourselves and sub some out. House has 7' basement that we are debating to add light framing, drywall, paint and carpet....good or bad idea?
Anyway..we are kinda nervous but pretty excited. I am going to get our tax id tomorrow, and we are going to open an amex blue account for some expenses as well as possibly a no interest/no payment account at lowes or home depot.
This is our first of hopefully many...I just want to do it right!
Suntzu18
Any of you guys have any feedback on anything?? Am I leaving anything out? I will let everyone know how it goes.
Who is doing the negotiation with with the bank on the short sell, who completed the SS package, and who is the contact with the sellers.
Brenda
As of right now, the deed has been signed over to the investor. The investor also has full POA. Homeowner has let the house and there is a lock box on it. I have not spoken with the bank at all. I am only going by what the investor (now the seller) is telling me. Pretty much that the bank absolutely does not want the property back and knows that there is no way the original homeowner can make good on the loan. She said that the bank (home state mtg) is usually pretty tough to deal with, but that they told her they would accept 80% of the FHA as-is appraised value., just to get it off their books.
I am planning on confirming everything again today. Do you recommend that I speak directly with the lender? Any other advice? Thanks so much.
I would assume that the investor does not get the $1500 until you buy the property. Sounds like a great deal, but wonder why he would let such a sweet deal go for $1500. But remember, a million and one things could also go wrong. Be prepared to buy with cash on short notice.
It is most likely that the bank will want to see the original owners name on the signed HUD that must be returned to them. Do not lose track of the original owner.
The lender will send their own appraiser. You will not get to handpick the guy. Make sure that someone knowledgeable is there to influence the appraiser towards a lower value. Probably best if you walk through the house with your own inspector first so that you can use his comments and written report with the FHA appraiser. Also give the FHA appraiser some low comps for the area. The FHA appraisal price makes or breaks the deal. Do not leave it up to chance.
Brenda
Brenda...A couple of quick notes...
I will not pay a dime to the referring investor until we close, dont worry..
The investor has told me that the lender specifically said I could handpick my appraiser for the FHA as-is appraisal. My guy is a good friend. The lender apparently really does not want the property, for whatever reason. Maybe too many non performing assets, who knows.
The original homeowner is pretty much out of the picture. Investor has POA and the deed.
This being our first deal, we really are not able to buy with cash if something happens, so really need to be able to SS then HML. Is it really extremely unrealistic to expect to be able to use our own appraiser?
I have never heard of the bank allowing you to pick your own appraiser. But it is possible.
When I said be ready to pay cash, a HML is cash.
Has your investor recorded his deed? How are you thinking the closing will happen? Will the inestor record his deed and then sell to you as owner, or will he use his POA and then tear up his deed. Do you have a lawyer lined up for this?
Why is your investor giving you this sweet deal?
Brenda