Deals Dropping From The Sky
I have once again had a potential deal thrown in my lap but would like some scenarios to see what route to take here.
I just happened to be talking to a realtor and in the midst of talking about the RE industry she asked me what I do and I responded, " I help people in foreclosure". She immediately says Oh, I have someone who is in foreclosure right now and just wants out of his house. I get the details from her and here is what has been dropped in my lap:
SFR worth 120K ARV
owes 72K and is behind 10 or 11 months with payments of 650 a month, no liens or judgments.
The house needs about 10K worth of work. Heres what I see..I am planning to do a short sale and offer 55K cash, put the 10K into it for repairs, give the seller 5K,throw the realtor a little, then sell at market at 110K. I anticipate making close to 40K minus closing and other expenses, so lets say 30 something. Still not bad for a conversations worth of time and a little verbal marketing. Will let everyone know what happens.
Benny
[addsig]
in a shortsale, the owner/seller cannot receive any funds from the deal. That's that biggest problem that I can see with your scenerio. Also, you don't clarify, but is the RE agent willing to 'give' you the deal, or are they expecting to receive full commission on it? This may be another problem, regardless of how you choose to buy the property.
Roger
Rajwarrior is correct as always,
Whatever realtor compensation will be, make sure you include this amount on your HUD-1 statement before you presenting Short Sale package to the lender.
If owner must have some cash back, then it will definitely be a problem for the Short Sale. However, you may be able go around it by making agreement with a seller to buy something from him (furniture, appliances, etc) after the Short Sale is closed.
Dmitry.
Thanks raj,
Well lets put it like this, I will make sure the owner gets 5K..LOL. As far as the realtor she just wants a small finders fee.
[addsig]
Congratulation, spend the profit wisely. A new sport car, a week in Miami avec a friend or someone who has got a friend. Enjoy.
Question. Your unpaid balance of mortgage at 72, plus costs and 11 back due payments. You want to offer $55. What are the chances that the lender will accept? I know good Negotiations !right on. Acceptance of that figure of $55 turns it into a winner.
Go for it.
Respectfully, Lucius
An important variable in any equation is alway the as-is, fair market value. If the as-is value is greater than the loan payoff, what's the motivation for the mortgagee to accept less?
For example, if the loan payoff is $72,000 and the as-is, fair market value is $92,000, what will make your Proposal compelling enough to warrant such a discount?
The Trilogy:
The Seller must be eligible for short sale consideration; the Proposed 'deal' must be in the mortgagee's best, financial interest; and the 'deal' must meet your own acquisition objective.
Without all three, you don't have a prequalified short sale candidate, and you are setting yourself up for an otherwise avoidable rejection.
I am pretty sure this guy will qualify as he has serious health problems and has also went through a nasty divorce just recently. Anyway, Im still putting all the pieces in order but it looks good so far. Just have to take it day by day.
Benny
[addsig]
Hi Lufos,
Yes I am going to start with a cash offer of 55K, of course they are always free to counter. Also add into the fact that I can close in 10 days might add some fire to their shorts. I figure the worst that can happen is the counter and re-adjust the numbers www.accordingly.Maybe less profit for me but if I make it win win for everybody then its all good. I am not greedy, any profit is a good one I would say.
Benny
[addsig]
If you need to squeeze the RE agent, tell them you will list it with them when you finish the rehab. They should be happy they will get some commission rather than foreclose(Nothing!).
Benny:
If I understand correctly, you're going to
get: a deed before you do anything. The deed won't be recorded,then you're going to follow the usually short sale scenario:
1.An authorization of release info from the defaultee
2. Get the Short sale package from the lender
3. Get the defaultee to cooperate filling out the short sale package
4 Make your net offer
5 Not "squeeze" the Realtor who brought you the deal, but include her
compensation on the HUD-1.
6. Not give the defaultee any money
Outside of closing, with a Bill of Sale, buy some personal property for $5000.
Feel tired and content after a good days work.
It would sure be great if things go that way or even somewhere near. I am kind of curious as to which way this thing is going to go myself. I dont see what I am asking too low, considering there are other factors involved as the property sits next door to a tavern and is on a main street. I actually figured all that in as well. I also plan on taking pics of all the damage with my contractor as well as pics of the location. And then add in the fact that the guy has serious health issues and just went through a rough divorce...I guess his deal with her was she takes the cash and he gets the house. Kind of cold knowing my man has no job and bad health and then you divorce him, take his little survival money, and leave him hangin...boy lifes rough aint it...
[addsig]