Cash Back Short Sale
If a property is worth $100,000. Bank will loan 90% LTV. Can you take a 90,000 loan to pay the say $70,000 short sale, and pocket $20,000???
Isn't this how you get cash back at closing?
Makes me want to go hummmm......
Tim
To do this you need to find a lender that will loan based on appraised value and not purchase price. The best I have ever seen is 75% of appraised value. Best bet is to get on the phone to some mortgage brokers and ask.
Tim,
You also need a clause that states you get the difference between the purchase price and the loan amount...or else the seller will get it. Just a heads up.
Tanya
The majority of short sale approvals are predicated upon the (mortgagee's perceived) as-is, fair market value of the subject property. If the perceived value is $100, they will want as much of the $100 as possible. You've got to remember that it's encumbant upon a foreclosing mortgagee to obtain maximum recovery in any negotiated short sale. If they feel that they can maximize their net recovery by completing a foreclosure and liquidating the property, they will.
It's reasonable to assume that the results of a foreclosing mortgagee's appraisal will be similar to the results of a mortgage loan origination appraisal.
It can be awkward and jeopardize your closing if you propose on one hand that a property is only worth $70, but it's disclosed that you hold an appraisal that suggests it's worth $100.
The art of short sale negotiation is, in part, a balancing act.