Posted by SB Wells(NY) on September 19, 2004 at 22:38:24:
Matthew,
Can you give some more specifics on successful short sales that you have completed?
Additionally, can you identify where you are located and whether you’re in a strong, weak or relatively stable real estate market.
Thanks,
SB Wells (NY)
SHORT SALE REALITY - Posted by Jerry
Posted by Jerry on September 19, 2004 at 11:24:59:
I have been reading up on short sales and have found them to be most interesting. The problem is that its hard for me to believe that investors can offer as much as 50% less than the FMV and have the bank accept this kind of a loss. I live in an area where the average home price is $400k. To think a bank would accept even $300k let alone $200k just so that they won’t have a loss on their books doesn’t seem too realistic to me. Maybe I’m wrong. I have heard from a bunch of people who have made some nice 5 figure money on these deals and others who have said the bank really won’t accept such a discounted price. I guess it depends on the bank/lender. Would appreciate some input from those who have done or attempted to do these types of deals. Thanks
Re: SHORT SALE REALITY - Posted by cliff
Posted by cliff on September 20, 2004 at 19:09:52:
Perhaps another thing you can do is explain to the bank that the owners are willing to file bankruptcy and can live for free for up to a year after filing. Show the bank how much it’s going to cost them in missed payments, taxes, insurance, attorney fees, etc. if these people are forced in to bankruptcy and they can net this amount now or a year from now-all the while the loan is still in default and that costs the bank money via opporunity costs.
Re: SHORT SALE LUNACY!! - Posted by Redline
Posted by Redline on September 20, 2004 at 15:28:13:
Don’t look at the picture perfect homes selling in the top 5% of the market on the best street.
Find the house that’s not been updated, on the smaller lot, next to the railroad crossing, on the corner with the weird lot size. Every town has em, no matter how nice the area is. Bingo, there’s your deal candidate.
Now that’s not to say you can’t short sale a pretty house but you get my point.
Short sales are not something you’ll do everyday, but they ARE doable. I’ve done one and I’ve only tried one! (It wasn’t, however my 1st or 10th deal though).
RL
Re: SHORT SALE REALITY - Posted by rdla
Posted by rdla on September 19, 2004 at 12:49:24:
Jerry,
YOur friends are right.
My 2 cents is if the value is there and if the property is in San Francisco, San Jose, Los Angeles or almost anywhere in Orange county, Calf. or anywhere in U S where value is comparable and as hot the banks will never get to that point ended up owning this house you are talking about based on your scenario because it will sell for more than 50% of value at trustee sale.To start with owners of these homes you are talking about get late on their payments, the bank send notice of default good for 90 days, if owner still don’t act,bank start 21 days notice of trustee sale procedure where trustee can sell this property at auction to highest bidder if owner don’t cure the default amounts. I will say owners must be mentally incapacitated to let go of the $200,000 equity to foreclosure sale. This is Calif. process and other states are different. So owners have 90 plus 21 days to sell, borrow or arrange some financing to save the property. I thougth I read this on this board that Texas only have 21 days forclosure process but do they have redemption period? Real world is this property if they are in areas I mentioned will sell to investors for may be at least 70 to 85 at trustee sale or full market value if the owner act and try ro sell it in a timely manner. So bank ending up owning this type of property with 50% equity under your scenario in the areas I mentioned is slim to none.The seller can borrow hard money 65 to 70% of value. if owners have time they can sell the house up to maybe 100% to value. So my feeling is bank will almost never end up owning this properties because investors bidders at trustee sale auctions will bid as high as 85% of value as i mentioned above.
Bottom line is it depends where that property is and only in exceptional situation and unusual property condition that this can happen on your scenarios and areas i mentioned.
took me 25 minutes to think and type this reply so please comment and discuss.
By the way where are you located Jerry?
I am in Colton Calif. San Bernardino Cty
RDLA
Re: SHORT SALE REALITY - Posted by Matt G
Posted by Matt G on September 19, 2004 at 12:38:10:
Jerry-
I’ve been doing it for quite some time(6 yrs). I am also in the bus.I find every deal is different, a challenge - my motto , some will,some won’t, so what NEXT! you can only help those who want to be helped
the thing is everday- people are having financial difficulties. So there are some great people doing incredible volume and making $$$$ from short sales. I must advise its not as easy as it seems or any others- anything worth while takes time,and patience. I also don’t just look at the $$$. I understand how life has its roadbumps, Death, Divorce, ETc and personally experienced tough times.My main goal is to help these people get on with their life and salvage whats left of their credit so they can buy again in the short term. recently I had a deal which was tough,it took me 7 weeks and made a whopping $5,500.00. I make that on an avg refi. The seller was graciousand thanked me for preventing a foreclosure. I have a zen philosophy- or as I would say “treat others how you want to be treated”,you never know where you may need help in the future and from who.
Best Regards,
Matthew
Re: SHORT SALE REALITY - Posted by Zach
Posted by Zach on September 23, 2004 at 22:50:25:
Short sale are a real tough breed. After trying twice I am discouraged, though I learned a lot.
My first try was with a house worth 187k, bank refused to accept a dime less than 170k for it. Considering the WORK that needed to be done on it yet, there was about three dollars in it for me. No go.
My second attempt was on a house i had appraised for 129k, and the bank was willing to accept 77k for it. Long story short, I wasnt able to convert on that one.
But it DOES prove that a bank is willing to deal way own on a house they don’t want to own.
Here is another reason why:
These people facing foreclosure had a principal balance of 85k. Through late charges and fees and everything EMC Mortgage tacked on, their pay off balance was 140k. True, they may have spent 5k on attorney’s and court fees, but they are still taking a 50k loss on PAPER. The bank was willing to accept 77k for it, a 63k paper loss.
Now even though the bank is taking a paper loss, their actual loss is limited to their attorney’s fees and costs. The bank gets a nice hefty 63k loss which offsets 63k in ACTUAL profits, and the bank comes out on top courtesy of Uncle Sam.
Neat how that works, eh?
Re: SHORT SALE REALITY - Posted by Bill Twyford
Posted by Bill Twyford on September 21, 2004 at 09:12:48:
Putting the short sale package together is 20% of the
process, however talking to the banks and presenting your case is the other 80%. The problem you have is everyone spends their time on the 20%, they think they are good enough on the 80%. I’m here to tell you they are not. That’s why you hear THIS WON’T WORK IN MY AREA, OR ARE MARKETS TOO HOT! when in reality they need to stop looking for excuses and start learning their scripts and objection handlers. It’s all in your presentation!!!
Bill Twyford