Posted by denali29 on April 06, 2006 at 22:33:46:
thanks john, anything else I should be looking for? I’ve done a few deals but no short sales.
PreForeclosure Short Sale ??? Experiences? - Posted by denali29
Posted by denali29 on April 06, 2006 at 21:29:08:
I’ve got a pre-foreclosure that comps at 135-150K. Property is in decent shape, no real repairs or major upgrades needed.
Owners have a 102K first and a 35K second. They want out without having it taken from them. Owners have asked the second lienholder about accepting a shortsale from an investor and the second said they would look at a written offer in the 40-50 cents on the dollar range. Owner also asked the first mortgage about an investor shortsale and were told that written offers would be looked at with no specifics given beyond that.
Both Mortgages are 90+ day no pays. Owners are aware that they may have to pay taxes on the diff. if a shortsale occurs and they are ok with that.
What issues am I dealing with here in terms of either the first or second being able to come back on me if one deal is accepted with the other offer still pending etc?
I was thinking offer 75K on the first and 17K on the second and then list the prop. at around 129K to move quick. For you experienced short sale investors, do these draw out forever or are mortgage companies motivated to move quickly once an agreement is reached? Any other angles I’m not considering here?
All input and thoughts are welcome and appreciated.
Re: compelling argument - Posted by TSSP
Posted by TSSP on April 07, 2006 at 07:24:06:
Frankly, I don’t see any reason for the first to consider accepting a penny less. They’ll be made whole
by foreclosing, and they want to maximize their recovery. And if it’s an FHA insured first, they will dictate what the second can recover via preforeclosure short sale, limiting the amount as previously indicated, to $1,000 to $1,500. The second, however, may feel justified in accepting less.
In that case, it would be advisable to try to purchase the second via an assignment.
Concentrate on the second.
The sellers may or may not have a tax liability on forgiven debt. The IRS imposes a test for insolvency and in most short sales, the sellers are insolvent or bankrupt.
Re: PreForeclosure Short Sale ??? Experiences? - Posted by John
Posted by John on April 06, 2006 at 21:41:24:
If the first would agree to short, they would only allow the second to recieve $1000 - $1500 as they really don’t care if they get anything but they will not discount if second gets cleared. You could try to buy the second.
Check with the loss mit department of the first and they will tell you their guidlines, it comes with package you ask for.
Re: PreForeclosure Short Sale ??? Experiences? - Posted by denali29
Posted by denali29 on April 06, 2006 at 21:48:08:
Is the second totally at the mercy of the first? If I offered the first 75K, the second could still force a foreclosure and sale couldnt they?
Re: PreForeclosure Short Sale ??? Experiences? - Posted by John
Posted by John on April 06, 2006 at 22:20:51:
The first will only approve a short on their terms. They dictate how much a second will be allowed to recieve. Most second mortgage holders realize this and they have a choice to take your offer, buy the property at auction, or get nothing because at the sale they are wiped out.
It is my experience the first won’t deal until the second commits for pennies on the dollar.