Posted by Joe on April 20, 2006 at 20:29:56:
Do your comps agree with the 2nd’s BPO?
Also, do you have any idea what properties are going for at auction?
$169k/$220k = 77%
That’s getting pretty high up there. And the fees tacked onto the 1st are increasing daily. Let’s say the 1st settles out at $175k in the next few weeks before the auction. And, let’s say someone is willing to pay 85%.
$220k * 0.85 = $187k
$187k - $175k = $12k
Another $6k in fees is easy to come by. And 85% is stretching it for investors. Perhaps a newbie investor will pick it up, but that’s a gamble, not a calculated move. So ask the 2nd, are they willing to risk it for an extra $2k over your $10k offer? Show them as many numbers as you can to get them on your side. Low comps. High repairs. Low bidding. Extra fees. Etc.
In the end, if you can get the 1st down to $100k, it would probably still be a deal at $147k (depending on the repairs needed). So any discount you can get on the 2nd would be gravy. Even if you offered them $20k, which might sound a lot nicer to their ears. However, if the 1st doesn’t like seeing the 2nd get so much for their position, they may not deal. So you may have to deal with the 2nd outside of the property purchase (i.e. buy their note for $20k instead of putting it on the hud-1).
But then again, what if the 1st comes back and will only take $150k. Then it’s not a deal at $197k.
Play it by ear and make sure you are on top of the numbers. Let us know how it turns out please. Just post a reply here or post a new topic.