HELP!!! - FHA Pre-foreclosure w/ low equity
Here's the situation:
-Motivated seller in pre-foreclosure stages
-House worth 84K
-Seller owes 74K on an FHA mortgage
-Seller owes 5K in arrears
-House in good (move-in) condition
Just got seller to sign a Authorization to Release form to start talks w/ lender regarding possible short sale. Two questions:
1 - Should the fact that the Seller has an FHA loan impact my possibility/strategy in negotiating a short sale?
2 - What other exit strategies should I entertain? (e.g. First thought is to negotiate a short sale, then wholesale or retail the property, but could I be missing out on a simpler/more profitable strategy?)
Entelechy,
1 - Should the fact that the Seller has an FHA loan impact my possibility/strategy in negotiating a short sale?
Yes. Loans backed by the government are very hard to short sale. If the house is worth $84K and the lien is $74K, FHA will see $10K in equity.
2 - What other exit strategies should I entertain? (e.g. First thought is to negotiate a short sale, then wholesale or retail the property, but could I be missing out on a simpler/more profitable strategy?)
You may want to go to the foreclosure auction and see if you can purchase it there. The opening bid may be lower than the amount owed.
Otherwise, it is not a very good deal in my perspective. You may want to keep your options open by working on several leads and don't get stuck on one deal.
Tanya