Short Sale Finish??
Hi all,
I have been doing tons of reading. I am not completely sure how to go about this and any insite would be helpful.
Owner called me owes 111k
he has already talked with his lender and they have agreed to entertain a short sale. Missed nov and Dec payment.
I took a contractor over and he has a bid for 33k in repairs. (to fix everything!)
I am perfectly willing to deal with his bank, realtor and anyone else I need to. But how do I explain to the owner that I am only going to offer the bank 75k for something he obviously paid more for since he still owes 111k on without insulting him? 
I know he needs to sign a sales contract with me for 75k, then the bank and I decide on an agreed amount to finish the sale right?
Hi Classib,
In overcoming that issue with the owner, simply tell them (before you show them the contract) that you are going to offer the bank a fairly low offer, because you are expecting the bank to counter you really high. Just share with them that this is where the negotiations with the bank begins and that the number (usually) goes up from there).
If you talk to the seller about it like it is no big deal, they will generally catch your vibe and feel the same way about it! Show them a solution to their problem and you have a friend for life!
Best of Success!
BAMZ
[addsig]
Bamz,
I have read alot of your posts and always enjoy them! Thanks for your QUICK response and the idea of how to deal with the owner. I will be trying that today. THANKS AGAIN!!
Nowhere in your post did I see what is perhaps the most important detail.
What's the home worth in it's as-is condition?
If the man owes $111,000, but it's got a value of $125,000 or more... than this might not be a suitable short sale candidate, irrespective of how much in essentail repairs are needed.
So, what do value do you think an appraiser will place on the property?
Hi ShortSale pro!
Nice to meet you! I think (looking at all the houses I have looked at lately) this house would sell for around 90k just how it sits. Maybe, there are some things on it that definately NEED to be repaired to make it so insurance would take it.
I appreciate all the info you take the time to put on here also.
If I were in your shoes, I would make certain that I could prove the home's $90,000 estimated value. That's what it will boil down to. The essence of short sale negotiation is to denigrate (factually)the mortgagee's perceived value of the property... Once they believe that your information (negotiation includes the exchange of information) is credible, they'll be more willing to consider your Proposal.
So I need to get an appraisal? I have an Oct. MLS book and have looked at the comps. Most are higher than this, but I do not know what problems the others have and I do know the problems on this one.
Short Sales are all about the as-is, fair market value of a subject property.
No, you don't need to hire an appraiser, but to be successful and independant in this niche, you should know how to read, interpret, prepare, and perform a review appraisal.
I am ready to submit this offer, does the owner have to sign a sale contract for my offer of 75k before I submit the short sale package to his lender? His realtor has the short sale package already, should I fill it our with them or do it myself?
Hopefully, the real estate broker or broker's agent can provide a listing agreement, and a contract for sale with the applicable short sale restrictive clauses... and can back up the Offer and Contract for $75,000 with comparable sales or adjusted comparable sales. If the broker can't provide comps or adjusted comps in the $75,000 to $90,000 range... you will have problems.
Yes, generally the mortgagee would have to have a bonafide Contract for Sale to begin the process.
Thanks so much, I really appreciate your QUICK replys. I am going to finish this today, at least with the seller. I have had two more calls and need to start thinking of them also. I guess ready, jump, learn with the things I have learned so far I will not learn anything more until I try right?
I am including this letter with my purchase contract for the lender, what do you think?
To Whom It May Concern:
I am offering a price of $75,000.00 for the property located at
*****************.
Enclosed is a bid from a local contractor that shows what repairs are needed and the cost of those repairs. I have also requested that the pictures I took of the house be included in my offer. The house is in need of repair and will not sell until many of these items are dealt with. I also believe that the home has not sold because the area has a new subdivision with new homes that are above the value of this one, especially in its current condition. The home is in unkempt condition in many of the areas and will have to be cleaned up prior to any type of sale. The master bedroom is also undesirable with a measurement of 10’ by 12’. The closet for this room is a 5’ by 1’ 22” and the master bath is a ½ bath that is shared by the back door.
Not sure how to end.....
Quote:
On 2003-12-09 11:55, TheShortSalePro wrote:
Hopefully, the real estate broker or broker's agent can provide a listing agreement, and a contract for sale with the applicable short sale restrictive clauses... and can back up the Offer and Contract for $75,000 with comparable sales or adjusted comparable sales. If the broker can't provide comps or adjusted comps in the $75,000 to $90,000 range... you will have problems.
Is that to say that the listing must be for the $90,000 as-is and the agent must show other properties in similar condition only sold in that price range.
If the Lender says it is valued at $125,000 and it is listed for that, would that hurt the proposal. Especially if there are no takers because of the problems and they are moving on thru the foreclosure process.
Quote:
If the broker can't provide comps or adjusted comps in the $75,000 to $90,000 range... you will have problems.
Hi everyone and SSP,
I have found from comparable market analyses (CMA), that "most" houses are are sold in relatively good condition (sometimes absolutely no repair), therefore I don't see sometimes HOW investors can support an asking price (in a short sale) with and MAKE profit when the comps are based on prices of houses in relatively good condition? When you consider closing costs, agent commisions, holding costs, fixup costs, profit , etc.. it seems diificult not to offer pennies on the dollar somtimes.
SSP: when you said provide adjusted comps, do you mean to take the average CMA's of same square footage and year build and then subtract the REPAIR costs of that particular property? To me that will illustrate the "as is value of the property.
Thanks,
Bginvestor
Hi,
I think what you have to do is decide HOW the deal will work for you. Then make your offer.
I did it!! I got all my paperwork together and submitted it. I talked to the owner and he was very nice. He just wants this thing taken off his hands! He got a phone call from the realtor today, some valves under the bathroom sink are leaking!! He is just tired of putting money into it. Also chatted with the realtor, told her what I wanted to do, after we visited she basically told me how these work and what to look for. She said she would help me as much as she could and I got the message that she is ready for this problem property to be long gone!!
I will let you know what happens, one twist to it though. Today someone else made an offer on the property also. The seller will get both tomorrow and then make a decision. He may decide on the other offer, and I don't feel bad. I have gained alot of confidence on this one and it has given me the opportunity to talk and deal with all involved. It won't be as hard next time. With 2 more calls since this one the next time is tomorrow!!
Also I wanted to say, I may have lost this deal because I didn't have the confidence to offer the seller the low offer because I was afraid of insulting him. (SEE Earlier post) This will not happen again. I will move on these quickly.
Hi Classib,
It is all a learning experience. The good news is that you recognized a soft part in your negotiations, and that you wont let that happen again!
Keep if fun, and go get the next one!
BAMZ
Well he took the higher offer. I knew he would, but I am a little disappointed needless to say. No more calls. Guess It is probably the time of year. Everyone's too busy spending to sell, or worry about thier house.
The realtor did say that she figured the bank wouldn't take the other offer and it was higher than mine. I would like to hear the details of someone who has REALLY done one of these.... Mostly numbers, maybe I was WAY OFF.