What do I do? Please help J Piper,JohnBoy - Posted by Joseph Madera

Posted by Joseph Madera on October 28, 2000 at 15:30:55:

Thanx I did check it out. The house is only worth 35K.Now I see why the bank was willing to do a short sale.Thanx for saving me about 3K between assumption and realtor’s commission.I guess she didn’t look close enough at what she was doing.End of the month and no closings make people desperate.Well I’ll keep trying to close my first deal

What do I do? Please help J Piper,JohnBoy - Posted by Joseph Madera

Posted by Joseph Madera on October 27, 2000 at 08:50:26:

I spoke to a realtor from the REIA investor’s club.She told me about a house that is worth about 70K and has existing 1st mtg about 50K.The couple owning it is getting divorced and they just want out.It is a fully assumable loan.She contacted the bank and said that they will do a short sale ( whatever that is ) and I can get in for 500 bucks which is the fee for taking over the mtg. It is presently rented and the house is in good condition.Also she wants her 5% commission attached to this.The total is 3K to get in.Are their any more questions I should I ask?My credit is poor but I have about 3 people who drive cab with me who are interested and have perfect credit.They would like to make a profit along with me.They aren’t interested in buying but assisting me.My idea is to get the house ,try to make an agreement with the realtor to pay her commission later, use my coworkers as owner or cosigner so that once we have the property refinance for cash out or flip it to them.I am little scared because what if there is liens or other things that could affect my profit margin later on.What is the best thing to do?

Re: What do I do? Please help J Piper,JohnBoy - Posted by dewCO

Posted by dewCO on October 27, 2000 at 20:07:44:

Everyone here throws around “Assumable” as if they mean nonqualifying assumable. Two different things. What is meant here in this story??? If it’s not NON qualifying then it’s probably not a great deal any way.

Johnboy is right. It can’t be worth $70k with only $50k owed against it and bank willing to do a short sale. They only do short sales when they owe more or the same as it is worth in it’s current condition.

Re: What do I do? Please help J Piper,JohnBoy - Posted by JohnBoy

Posted by JohnBoy on October 27, 2000 at 11:35:28:

A short sale is when the lender holding the mortgage is agreeing to take less than what is owed. This is usually when the property is in or about to be foreclosed on. Are the payments current? If not, (which I doubt if the bank is talking a short sale) how far behind are they? Does the property need any work? If so, how much will it cost to fix it up? The realtor says it’s worth $70k, they owe $50k and the bank is saying they will do a short sale. Something doesn’t sound right. Why would the bank agree to a short sale on a mortgage of $50k against a property worth $70k??? That doesn’t sound right. Is the property worth $70k NOW, in it’s current condition, OR, will the property BE worth $70k AFTER it’s fixed up? How much will the fix up cost?

You can’t go by what the realtor tells you. YOU have to VERIFY the value by getting comps on compareable homes that have sold in that neighborhood recently. THAT’S what the property is worth in FIXED UP CONDITION. Don’t use this realtor to pull the comps for you either. You can use another realtor for this, or check the county courthouse records for recent sales, or check with a title company for comps, or use an appraisor to get comps for you. But don’t use the realtor you’re working with because she can hand pick the highest priced comps without showing you the lower priced ones that have sold.

You can check title at the courthouse for any liens or have a title company run a preliminary title search for you. You can check for liens after getting the property tied up under contract.

What you need to do is find out how far behind the sellers are on payments, what the true value of the property is, and what it will cost to get it fixed up to be able to get market value for it.