Posted by Kristine-CA on July 13, 2003 at 24:09:26:
Jay Phx: I’m not a short-sale investor. I’ve tried a few but either ran out of time or was not able to get the bank to go for it. You’ll need a short sale package from the lender. It’s not like they just make a quick decision on the phone. (I’m assuming this is an institutional lender.) There is an appraisal involved and your seller will have to show hardship, etc.
Regarding your question about double closing. I am unsure who the purchase contract is with in a short sale. Is it with the bank as the seller, or is it with the seller, with the bank as a lienholder? I never got that far. A lot will depend on your contract and who it’s with when it comes to the ease of a double close.
But why mess with a good thing. If you have the property subject-2 already and you have a qualifed buyer that can cash you out for a quick profit, why not just go for that and be done with it? I don’t know how subject-2 affects title seasoning. And you may well run into a problem there. Make sure your mortgage broker understands that your buyer is buying a property that has title seasoning issues.
Hello All,
I’m in the process of trying to negotiate a short sale. I have found my buyer and have them approved for my sale amount to them for $165. I will ask the lender if they will short sale come monday but I’m kinda nervous about it! It’s my first time! ;o)
I’m not sure I can ask for a great discount because the house is in really great shape and I don’t know how else to negotiate a low price without the “repair card” to pull on em!
If I CAN get them to discount the loan, and I ask for 45 day closing, do I have to show proof of funds? I don’t have it, and my credit stinks, so I’m not sure I can qualify for a good loan until I can get my buyers funded. Is a double close possible with a lender when doing a short sale? Any tips on how to “get the planets to align” so I can complete the deal and get my very first closing check? You guys are awesome, thanks for any help you can give me!
Jay Phx
Propert Stats:
Owner Finance sale to my buyers: $165k
Down payment amount= $10k
Market Value = $155,000
1st Mortg. Bal= $139,900
HOA Lien = $1K
4 months behind on payments of $1111/mo.
Trustee’s sale a couple months away.
I think that you?re co-mingling a few techniques that are difficult to get to work in tandem.
Banks will accept a short sale because their profit is front-loaded, and they want to get the cash recycling in their system to make more money. The short sale amount that you would pay is in cash. Where is that cash going to come from if your buyer is going to put $10,000 down?
In a couple of months, the bank will have a house in really great shape that it can list and sell for the cost of a 5% or 6% commission and recoup a high percentage of what they have in the property. Why wouldn’t they wait?
If the property is in great shape and the first is in a solid position 139k vs 155k market value, why would the 1st Short Sale? Secondly like Kristine asked, how are you going to do seller financing? Are you planning to sell the note in a simultaneous close and flip to your buyer? If so that part of the deal is ok.
Re: S/S, Double close, w/proof of funds - Posted by Kristine-CA
Posted by Kristine-CA on July 11, 2003 at 17:30:56:
Jay Phx: There is something I don’t understand about your post. How are you going to owner-finance to your buyers for 165K if you aren’t planning to buy the property? You say you have the buyer approved…approved for what?
Can you take the property subject-to the exisiting financing, (paying off the arrears) and then sell or lease option to your buyers?
Hi Kristine,
Thanks for taking the time to follow up on my post. When I re-read my post, I realize that it was not very clear at all. Let me try to explain a little better:
I have actually taken the property subject to and found my exit buyer who gave me 10k down to owner finance them. However, I haven’t recorded my deed yet just in case I ran into any issues. I was going to owner carry my buyers and reinstate the loan, but I was able to get them qualified for a new first mortgage through a mortgage broker, their credit was better than they thought.
The amount they qualified for will pay off the foreclosing first mortgage plus give me some cash for profit. I thought it would be wise to try to negotiate a discount on the defaulted first to increase my profit base in the property! So I was wondering how difficult it would be to negotiate a discount on a nice house that needs minimal repairs AND if they do discount the loan, is it possible to double close with the lender that has the original first mortgage and my new buyers? If it is possible, do you have any tips that might make it easier so I don’t run into major roadblocks during the double close?
The usual way to do this is to get your seller to make out a new deed to your buyer. This is then put into the escrow and the lender to your buyer sees the transfer from the owner who has been on title for a long time so has no problem with the issue of “seasoning of title.”
You don’t get a short sale this way, but you do get a quick sale, with a quick profit. I have never tried a short sale, but from descriptions it is a bit of a nuisance to do.
Re: My post was not very clear! - Posted by Kristine-CA
Posted by Kristine-CA on July 13, 2003 at 24:19:10:
Jay Phx: I’m not a short-sale investor. I’ve tried a few but either ran out of time or was not able to get the bank to go for it. You’ll need a short sale package from the lender. It’s not like they just make a quick decision on the phone. (I’m assuming this is an institutional lender.) There is an appraisal involved and your seller will have to show hardship, etc.
Regarding your question about double closing. I am unsure who the purchase contract is with in a short sale. Is it with the bank as the seller, or is it with the seller, with the bank as a lienholder? I never got that far. A lot will depend on your contract and who it’s with when it comes to the ease of a double close.
But why mess with a good thing. If you have the property subject-2 already and you have a qualifed buyer that can cash you out for a quick profit, why not just go for that and be done with it? I don’t know how subject-2 affects title seasoning. And you may well run into a problem there. Make sure your mortgage broker understands that your buyer is buying a property that has title seasoning issues.