Short Selling with no equity
Hello all, I just got through reading several articles on short selling and had a few questions.
For this example $100,000 is owed on the property and you are able to get the bank to settle for $65,000.
1.) Provided you are able to get the bank/lender to accept your offer, can you give the seller cash say for moving expenses? What is the maximum you can give the seller? Can this be considered a kick back and illegal?
2.) If you get the bank to accpet the offer and not pursue a judgement against the seller for the difference will this show up on the seller credit report as "settled" or "paid in full"?
3.) What is an assignment fee? Does this limit the amount that you can flip the property for? Could I turn around and flip this property for $90k?
As always thanks for the continued help and support.
Graham
For this example $100,000 is owed on the property and you are able to get the bank to settle for $65,000.
1.) Provided you are able to get the bank/lender to accept your offer, can you give the seller cash say for moving expenses? What is the maximum you can give the seller? Can this be considered a kick back and illegal?
You can give the seller 'U-haul' money to help them move out. Everyone is has their own limit they set as the maximum you will give a seller. I personally wouldn't give a seller more than $500 to move out. But, that is my opinion, you may feel differently. It should not be illegal. When you short sale, the lender does not want to see that you are giving the seller any money from the deal because they owe the bank. You can if you choose, but that is a risk you take.
2.) If you get the bank to accept the offer and not pursue a judgement against the seller for the difference will this show up on the seller credit report as "settled" or "paid in full"?
I am not sure what will show up on their credit report. But, it should be better than a foreclosure showing on their credit report. I would assume it would show "settled."
3.) What is an assignment fee? Does this limit the amount that you can flip the property for? Could I turn around and flip this property for $90k?
An assignment fee is what you are paid if you assign the contract to a buyer. It depends on what you set the assignment fee as. You can turn around a resell or flip the property for $90k.
Tanya