Estimating Payoffs?
I'm just curious in your experience how accurately payoffs can be estimated.
I subscribe to a local company's foreclosure listings for leads on motivated sellers. I found one which was also listed in MLS.
The info I keyed in on:
Auction - 4/6/04
Tax appraisal - ~$71k
Loan Date - 10/95
Original Loan amount - ~$43k
From this info I estimated (incorrectly) that they owed around $39k on the house. I figured if I offered $57k that would give the owner about $14k, pay the agent's commission, allow another 1% in closing costs, then give me $14k in equity.
I went and took a look and the place was in fairly good shape considering other places I've looked at.
When we exited the house I told the agent what I wanted to offer she told me it was impossible. That the listing price was needed in order to payoff the loan. I was shocked and told her to keep me in mind if she needed to move any property fast.
Just after viewing another house with another agent the previous agent called and said she spoke to the owner whom had given her permission to talk to the bank and see if they would be interested in my offer.
I thought that she was b.s.'ing about the bank stuff - i didn't see how someone who had been in the house for 9 years could have no equity in a house.
She called the next day and said the bank was willing to look at my offer and we met later in the day to write up the offer. I got copies of the title work which had already been done. There is a secondary lien for $4k, which can explain some of the difference. She said again that I would be making the offer to the bank and that we were doing a short sale.
I'm just wondering how common it is that the payoff can be so much higher than the original note?
One piece of info that I did not pay attention to from my foreclosure listing service was the the home had been previously listed for foreclosure 3 times - once each year for the past 4 years.
I'm guessing that this is a clear indicator that the equity has been eaten away badly and a short sale might be needed?
Should I also infer that listings which do not have previous foreclosure postings are 'cherry' and deserve more of my attention?
thanks for any input-
Steve
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