If the numbers are such that you’ll make $20K on a quick flip… then don’t get your hopes up. Your offer must be reasonably close to the appraised, as-is, fair market value. If you offer $20K less… then the lender will likely reject your offer to the Seller. Once you present the Offer to the Seller, and the short sale proposal is prepared and presented to the mortgagee for approval… they will order an appraisal, and a complete financial application from the Seller. The process can take from 45 days to 90 days or more.
Sometimes, when a mortgagee anticipates a loss, they’ll sell the loan to a new servicer which will require that you start from scratch with the new mortgage loan servicer.
I have posted a similar question but was unclear as to what I was asking. I am meeting with the Realtor in 4 hours and want to know if I should reschedule until I have some numbers in front of me.
I am meeting with a Realtor today to tie up a “fixer upper” property in a p&s agreement.
My question is, Can I not put a dollar amount on it.
My contractor is still working on his estimates for the rehab of the property so I do not have any numbers yet to go off of.
I want to make the offer to the seller with the dollar amount saying “price to be determined by bank short sale”.
I may phrase it more like “contract price contingent on third party approval (mortgagee). Seller hereby gives permission to Buyer to negotiate with the lender in this process” or something like that.
What usually happens in a short sale is, the bank will expect to get a firm offer with a number on it. They may go up from there, if they don’t think they’re getting enough, but guaranteed they won’t go down, so make sure you know all the numbers (including closing costs, etc - the bank will be expecting to hear what THEIR NET is going to be; I usually submit a Net Sheet or a preliminary HUD-1 to them; they always request one and sometimes red-line it and cut out some things as unallowable expenses - e.g. HOA fees; liens, etc.). A short sale situation is just another negotiation. What you should do is give your lowest offer; if the bank counters, then you’ll be able to negotiate.
The Seller has nothing more to lose, really; they’re not getting any money anyway, so such a clause should not be a problem. Then you and/or the realtor (you did say one was involved, right?) can work with the bank - I like to control my deals, but if the Realtor has more experience they may be the logial choice for the negotiation with the bank. In addition, the Realtor will have to include his/her commission in the numbers submitted to the bank. Technically, the “seller” is paying for it (on the HUD-1 as commission); but the banks will have to agree to the percentage commission they will give the agent on a short sale too (they sometimes will cut it down) so the Agent has a vested interest in remaining in the loop, as you can imagine.
I just didnt want to go into the process and sound as if I have no clue what I am doing. Which until a week ago, I didnt have a clue about short sales.
I just spoke with the Realtor and she got to talking and she has handled about 50 short sales. So I am going to let her do the negotiation.
I just want to wrap the property up in a contract and then work on getting the Net sheet(which I had no clue existed until about a half hour ago).
I also learned from researching the net sheet that the lender pays the commisions and the closing.
I didnt know that either.
I thought I would pay that since I know the seller is cash strapped as she has just abandoned the property and left it filled with junk.
Thank you very much for your response…I’m hoping I can get this deal going.
I stand to make about 20k with a quick flip or I could just go ahead with the rehab and make about 50k.
carmen,
i tried to email you at ibuyhomes@ua.net but it was returned undeliverable. i am in miami and would like to ask you some questions.
please reply at discs@bellsouth.net