Posted by Barry (FL) on July 20, 2003 at 19:14:27:
Sorry, what you originally wrote is below. I read through it quickly and thought you were saying there would be a hardship letter from two different people on the same property. I have had this before in divorce cases. Yes, each case will be different.
“Also, what about the Hardship Letter? I know each seller is going to have a different “sob story” on their hardship letter but is there anything I should know about to either “omit” or “add” in the hardship letter that might make it better?”
Also I’m still a bit confused about what you are saying. FMV=180k balance due 140k is this correct?
If so get Sears home improvements to give you a quote. They are very pricey. Try to get as high a repair amount as you can especially if you can get it from more than one contractor.
"When I make my offer to Countrywide and, if it’s rejected, will they come back with a counter-offer or will they just say ‘no’ to my first offer.
They may counter, they may not. Try to build a relationship with the person in the Loss Mitigation department who’s in charge of this file.
BTW, my offer is going to be somewhere around 85% of loan balance. Problem is, the house has about 20k in equity (FMV=180k). I don’t want to go too low because it could drag out the process and their foreclosure proceedings aren’t slowing down either!
This is why you are going to take pictures and get high but not unrealistic repair quotes to make it look as bad as poosible. You need to make them not want it.
O.K. Based on other posts about this pre-foreclosure deal, I’ve backed off on my original offering and talked the sellers into trying to do a short sale. Now, we just have to get the lender (countrywide) to go for it. I’ve got the short sale package from them and the sellers are trying to gather all of the required documents. A couple of questions:
When I make my offer to Countrywide and, if it’s rejected, will they come back with a counter-offer or will they just say ‘no’ to my first offer. BTW, my offer is going to be somewhere around 85% of loan balance. Problem is, the house has about 20k in equity (FMV=180k). I don’t want to go too low because it could drag out the process and their foreclosure proceedings aren’t slowing down either!
Also, what about the Hardship Letter? I know each seller is going to have a different “sob story” on their hardship letter but is there anything I should know about to either “omit” or “add” in the hardship letter that might make it better?
Also, does anyway have an example of the net sheet? My thoughts from what I’ve read about the net sheet is that, it needs all of the outstanding balances, closing costs, repair costs (bumped up as much as I can) and, obviously, bottom line sales price. Is there anything specific I should put in there?
Never, ever, ever, ever tell a bank this was an investment property, if the owner bought it to live in originally, even if they’ve had it rented out.
I learned that the hard way, when the seller spoke to the bank without my knowledge when we were mere days away from a “sure thing” … it was an FHA loan, and just because the owner mentioned in passing that he had it rented out … the whole short sale thing fell through. The house was no longer eligible. GRRRR! There are certain rules that may allow it to be rented short term, but I’ve learned to not allow the sellers to talk to the bank any more after I’ve started the process!
There are examples of net sheets on here. I’ve posted the one I use for short sales, and it’s worked fine. Remember to get all the costs from the title company, survey, title insurance if in your state/county the seller is supposed to pay, and all other closing costs included, and check the taxes as well. Have some “fluff” (but not outrageously so!) that the bank can “cut” and still give you what you need. Make the bottom line number equal zero. Some banks won’t allow the seller to come in with any money. Some banks will actually allow the seller to make $1,000 or so. The rules vary, so you may want to ask them. But most banks want to see a Zero balance, and they will ask to see the HUD at the closing before they release the lien, so make sure it works out very close to that at the closing too.
Below is a response to another question, which includes a net sheet:
Re: Net Sheet and Hardship letter for SS - Posted by MicheleCO.
Posted by MicheleCO. on July 20, 2003 at 18:24:07:
Have your seller include in the letter "my attorney has advised me to file bankruptsy, but if you accept my buyers offer I won’t have to. Also, make sure it is handwritten. More sob value. Can your title company prepare the Hud? Mine does. MicheleCO.
make sure you are there when the BPO happens…you need to have the lowest comps in the area and point out all the bad features of the house…do you have the deed yet??
Re: Net Sheet and Hardship letter for SS - Posted by Barry (FL)
Posted by Barry (FL) on July 20, 2003 at 14:46:52:
What kind of shape is the house in? Is there actually 20K in equity or does it need 20K in repairs?
You need to take pictures and make the place look as bad as possible to submit with your package.
Hardship letter I think would contain the same hardships if they are from the same property, no?
Have the owners tell the whole sob story with tear stains on the paper! Make sure they mention something about this wonderful person, you, who has agreed to buy their house and how if the sale does not go through, they may have to file bankruptcy!
A net sheet is just that, after all costs are subtracted from the sales price it is the NET of what the bank will recieve. SEE HUD 1 or HUD Statement.
Make sure that there is no money going to the owners in the HUD1 or there will be no short sale.
Thanks Carmen for the info. I, actually, found your post from 2002 which includes your version of the netsheet a short while after I made this post. Very detailed. Thank you very much.
Question: Have you ever run into an issue where you were the name on the ‘authorization to release loan information’ form AND the buyer? A guy I know who’s a realtor told me this could be an issue because it’s not an arms-length transaction.
Thanks for the reply. I believe there is about 20k in equity AND it needs about 20k in repairs. And, I’m sure I can find a whole bunch of other stuff to increase the “repairs” number, which I’ll do.
The required documents from the lender suggest that I can send in either a HUD1, netsheet or estimated closing statement. I think I’d rather send in a netsheet. It seems more of a free-form document. I’ve never filled out a HUD1 statement.
I don’t know what you mean by this statement, “Hardship letter I think would contain the same hardships if they are from the same property, no?” Could you explain a little bit?
I work with another investor, who owns a corporation, who is actually always the buyer on all my transactions. The authorization is usually in my realty corporation’s name, so they can speak to any agent of the realty company. It has never been an issue for me.
In any case, the banks sometimes act funny if you tell them you are an investor looking to buy their property, which is why we have a third-party company “helping the sellers out of a tough financial situation” … but there are people on here who are the principals and deal with banks on short sales, so I’m sure they have some advice as well.
The only time I can see it as an issue for myself would be if I, as a Realtor, did not disclose to the Seller that I was a Realtor; the banks don’t really seem to care or have much of an issue at all with who’s buying the property.
Re: Net Sheet and Hardship letter for SS - Posted by MicheleCO.
Posted by MicheleCO. on July 20, 2003 at 18:29:47:
Get the deed anyhow. You don’t have to record it. Use it as a negotiating tool with the lenders. Example, you have to agree to take an offer for less than what is owed, or any offer for that matter. Tell them you will allow it to go all the way to foreclosure thus increasing their costs and expenses. Be careful here. Don’t Bluff. What have you got to lose? A BPO is a Brokers Price Opinion. Lenders will order one from preferred agents in the area to determine the value of of the property. In my area I buy a lot of listings from an agent who has a ton of the foreclosures listed by banks and lenders. It is in his interest to price it so that he can sell it fast. MicheleCO.