Short on information. Short Sale Potential? - Posted by Ron M (WA)

Real Estate Investing
1

Posted by B.L.Renfrow on July 08, 2003 at 20:22:52:

If the borrower has only missed one payment, it’s pretty unlikely the first would be motivated to discount. That becomes more likely as the delinquency worsens and foreclosure is looming. However, if the first is a VA or FHA loan, they’re not likely to discount at all.

Of course the agent would like to see you offer $75k. Obviously the commission earned from a $75k sale is greater than with a $52k sale. Remember, the agent is working for the seller, and is obligated to get the seller the highest price, not to get you a good deal. However, the agent would be obligated to present any offer you make, unless the seller has instructed him otherwise.

What you can do is assist the owner in completing the short sale package, make your offer through the agent, and make sure plenty of photos are included with the package, showing the undesirable aspects of the property clearly. It also won’t hurt to include comps supporting the lower price.

Brian (NY)

2

Short on information. Short Sale Potential? - Posted by Ron M (WA)

Posted by Ron M (WA) on July 08, 2003 at 11:33:05:

Yesterday, I found a home in a decent neighborhood of homes that retail for around $85,000. The home is vacant and listed with an agent. It has been on the market for almost 6 months now. The grass is dead and there is some pealing paint, but mostly the home is in pretty good shape. The attached garage was converted to a family room, so the home has no garage.

In my opinion the home would retail for around $79,000 completely fixed up. Fix up costs are: $2,500 for new carpet, $1500 for new paint, estimated holding costs for 6 months $3000 including utilities, interest only payments to my bank and yard maintenance.

The agent states the 2nd mortgatge is $22,000 and the first is $75,000. He believes the 2nd will accept a $2,000 payoff. But thinks my total offer to the seller should be $75,000. He says that he has never seen a lender accept $40,000 or $50,000 for a first mortgage on a property in a nice neighborhood.

I would like to offer $52,000 including selling costs. This would put me into the property 6 months from now for $59,000. Selling the property at $79,000 would give me a profit of about $10,000 to $15,000 after paying agents’ fees.

Do anyone think this would be an acceptable offer to a lender, and at what point would the lender be more likely to accept this offer. The seller paid their May payment but not their June payment. They have not received a letter of foreclosure, but they have received a telephone call. The seller is not going to make their July payment, and they have requested a short sale package from their lender.

Does the agent have an incentive to influence me to make a higher offer? If I tell the agent to offer $52,000 are they under obligation to do so? If this forum thinks there is potential, I will check at the courthouse to see if there are any other liens. Is there anything else I need to know?

Thanks everyone,

Ron M (WA)