Short Sale Help!
My parents let their home go to the bank (Bankruptcy as well) about 2 years ago. The bank has finally started foreclosure (judicial). My husband and I are considering buying the property from the bank. It would help us (we would like to move closer to family) and it would help my parents (no foreclosure) but there is no realtor involved and I would like to get the property for as little as possible. As I understand it, I need to put together a package for both the first and second mortgage lenders to look at. I've ordered a title commitment to show liens (county tax and federal) and both mortgages. I am writing up a contract to buy from them but not sure where to go from there. Can anyone help? What should I be offering as sales price? Should I do a mock HUD to show no proceeds?
Are your folks still in Bankruptcy.. or has it been discharged or dismissed?
What's the house worth?
What's the balance due on the first? The second?
Taxes? Federal? Property?
How much do you have to put down? Can you get a mortgage loan for the purchase? Have you been prequalified and/or preapproved?
[addsig]
Sorry...
The market value on the house is $164,000. The first mortgage is about $112,000. The second mortgage is $40,000. (by the way, they accidentally did a full reconveyance and currently have filed a lis pendence to make everyone aware). There is a federal tax lien for $9000 (my mom is currently paying it back). The tax lien is about $2500.
The bankruptcy was discharged already but I wasn't aware of all of this trouble until just recently. I'm nervous because there is a date of sale with the Sheriff and I know that time is of the essence. I'm waiting for my title to come back so that I can have a better grasp of things.
My husband and I have great credit and could be pre approved very easily. We just sold our house and currently are looking for something else. This seemed like great timing!
Do they have to know? I'm their daughter and therefore don't share their name. It's my married name that I go with.
If you attempt to put the loan in your name then a credit report will show all names you have ever used in the past. This will signal the lender that it could possibly be a non arms length transaction. Then also at closing you will sign a document that shows all names you have used in the past as well and this is all available for the IRS to review after the sale. I believe if they find out it would'nt be good.
Should I just play my cards then? Wouldn't they be happy to have someone...anyone help get the house out of foreclosure? The money owed on the house is beyond what the house is worth. It needs some work, not in the best location, etc. If the house goes to sale I would think that they aren't going to get what's owed anyway. The liens take first priority then the first, then the second. I was thinking that they may actually want to talk to me about it before it gets that far.
I wouldn't. I would have them ask the bank if they can do a short sale and then list it with a realtor. Of course others would say no way on a realtor. I happen to be one and list homes for people trying to sell before foreclosure. For example I have one listed now that the current owners owed $120,000 but after we requested payoff they added fees in that gave us $169,900 payoff. (So check on payoff of their home, it is not necessarily the loan balance.) Then I looked at fmv which was $160,000 and in your case $164,000, I then subtracted the cost for repairs and marketed the home for sale at $148,000. I have 2 offers within 2 days that are awaiting approval from the bank. They have to do an appraisal. It is being shown constantly. People that are looking to owner occupy put in much better bids than investors typically and the bank tends to accept those deals quicker. Remember that a short sale is where the bank is going to accept less than the payoff (the $169,900) in lieu of foreclosure. This would really help your parents and then you get a realtor to do a search for you in the mls for other short sales or good deals. This way you never have to hide the truth.
Jill
Unfortunately, the home is not worth the amount of money that it would take to hire a realtor. I have liens to pay off and mortgages. In addition to that, the house needs repair so any equity might have to go for that. I want the house at a bargain because its not in the best location. My parents would like to sell instead of foreclose but I don't really want to get a realtor involved to add to the mix. If it goes, it goes is their mindset.
The bank pays the realtor. So it is affordable since it makes the purchase price lower. But lets say someone does it without a realtor then the bank will get an appraisal showing value at $164,000, then you do a HUD-1 to show the bank what it will net
$164,000.00 FMV
-$9000.00 1st lien
-$2500.00 2nd lien
-$35,000.00 Repairs
=$117,500.00
This is where you would also put in the realtor commission. I can tell you though if you are not expeirenced in short sales it is worth it to hire someone to guide you in this www.process.Offer $117,500, or $112,000 or even $80,000 whatever you want. Then on the 2nd maybe offer something like $5000. Make sure and have your parents ask for a release from them charging your parents for the difference in what is owed and what is an accepted offer.
Thanks for the advice. I just found out from the sheriffs office that the public sale is Sept. 22nd. I'm hoping its enough time but I'm not too confident. I think that I may contact an attorney in their area and see if they can put together an offer for us. I don't want to mess it up.
An attny who does this sort of thing would be a big help to you. Ask around get someone who knows the foreclosure biz.
If you find an attornery who is familliar with the foreclosure biz.
Please let us know or message me privately
Niceguy