Advice on Short Sale Approach - Posted by kf_az

Posted by Stacy (AZ) on December 22, 1999 at 11:20:37:


This sounds very positive. I think you have a good chance at some sort of discount. Keep in mind that the lender may have an appraisal done to verify your facts. One of the lenders I dealt with had a local real estate agent do a competitive market analysis before they considered my offer.

I like the fact that you’ve taken the bull by the horns yourself. Go get 'em.


Advice on Short Sale Approach - Posted by kf_az

Posted by kf_az on December 21, 1999 at 09:30:10:

I have a pre-foreclosure ready and willing to deal with me if I can make it work. 1st mortgage for 40k, 2nd mortgage for 40k, FMV is 80k. Trustee sale date 12/30/99…not much time. Owners will file bankruptsy if I can’t help them. It is my understanding that the second lender “should be” quite motivated to discount this note due to junior position and potential of getting nothing if it goes to auction. I also hear from a more experienced Realtor/Investor in my market that they might take an offer of 10k for their 40k note. This experienced Realtor/Investor was going to try and negotiate the deal for me and I would compensate him for it. But, he is very unorganized and keeps asking me to fax him the payoff doc on the 2nd. I’ve done it twice now and have decided to “get my feet wet” and try this myself. So, for you CREO seasoned short-buyers, how would you go about this and how should I best approach the lender? What are the right things and wrong things to say so as to not alienate the decision maker?


Re: Who owns the second? - Posted by Stacy (AZ)

Posted by Stacy (AZ) on December 21, 1999 at 11:41:58:

Hi kf-

Is the 2nd note holder a private individual, maybe holding an owner finance note? Chances would be better for a discount if so. I’ve tried a couple of times this year to geta BANK owned second to discount, and had no luck. But I’ll try it every time, since it certainly doesn’t cost anything to make a few phone calls. I learned a lot in doing so, so I would encourage you to try it yourself.

Good luck.


Re: Advice on Short Sale Approach - Posted by NJDave

Posted by NJDave on December 21, 1999 at 11:27:15:

From what you have described, there isn’t much incentive for the 2nd motge lienholder to agree to a heavy discount. If they have been properly notified, I’m confident that they would attend the sale and bid on the premises up to at least 80% of it’s FMV.

If the property were physically distressed, and truly upside down, and you were to present a comprehensive short sale proposal… then you might have a decent chance for a heavy discount which is what you would need for this deal to make sense.

Re: Better effort, better result - Posted by NJDave

Posted by NJDave on December 21, 1999 at 16:53:52:

If the proposal doesn’t make sense than nothing would work. However, to better exploit an opportunity, you should do more than ‘make a couple of phone calls’ and you would probably have had more success.

Try approaching the process with a plan, rather than just making a few calls. A comprehesive proposal with a supported argument could be given consideration.

Re: Better effort, better result - Posted by Stacy (AZ)

Posted by Stacy (AZ) on December 21, 1999 at 17:31:24:

Yes, I got in a hurry and understated the facts. After my phone calls to the lenders, I sensed that there was some degree of interest in what I was doing. So, once I found the decision makers, I sent a professional proposal to the two lenders, complete with a cover letter, pictures of the property, a detailed estimate of repair expenses, comps, a hardship letter fom the owners in default, their last three months of bank statements, last two tax returns, a copy of my signed purchase agreement, and a financial analysis showing why my proposal made sense (which it did).

One of the lenders considered it, and finally rejected it. The other one rejected it outright. I later found out that the second lender has a policy to hold onto defaulted loans and pursue them through judgements.

I made a few phone calls on another second last week, only to find that the bank does not sell it’s second mortgages. Therefore, a few phone calls was all it took to find out.

I know you are in the business of selling your short sale proposal services, and I have no doubt you could do a much better job than I. However, I did learn quite a bit, and I think I’ll be successful at it eventually. It’s definately something I’ll try every chance I get, and get better at it as I go.


Re: Better effort, better result…I made the call - Posted by kf_az

Posted by kf_az on December 21, 1999 at 21:18:48:

The 2nd is owned by Republic Bank out of St. Petersburg, FLA. I called and got transferred to their foreclosure specialist. I told them what was happening with the property and the 1st. She was not notified or at least cant find any notification from the 1st that this was happening. So, that was a good start…I think she appreciated the heads up. I told her very plainly that I didn’t know what procedures to follow, although I knew exactly what I could offer, and looked to her for insight on what to do. She was very helpful and mentioned many of the things you did in your proposal to the lender you called. However, most of it was paperwork and requirements that they(lender) will send to the mortgagee to complete and return. She asked me what figure I had in mind on the 40k note. I told her that all I could offer to make the deal work for me is about 10k. She didn’t hang up on me, which was a good sign. She mentioned that they would need all of the details of the mortgagee’s situation(hardship) to ensure that they weren’t discounting to the extent that I had in mind while the mortgagee might have money to spend on fine dining. She said for instance they would look to the mortagee to kick in maybe 5k along with my 10k if they couldn’t accept less than 15k. It could all be rhetoric at this stage until they get the facts, but for my first call, it was encouraging. And even if it doesn’t fly, as you’ve said, the education is priceless. And then, I won’t have to rely on unorganized, chasing-their-own- tails, you-call-me-if-I-forget-to-call-you, life-in-the-fast-lane, pros that make tons of money in spite of themselves. No resentment here…lol. Anyway, I’ll keep you posted. And thank you too NJDave for your input.