How Do I Approach Loss Mit
ARV= 51,000
mort balance=41,000 @ 11% interest
repairs=10,000 [as of now, may go up]
comps are between 36k & 61k in this subdivision [the 36k home was forclosed on and the 61k is BIG]
Seller cant afford to pay, called loss mit & they said 'make us an offer'
What price would you all offer loss mit and why.
I'm under the impression that since I have to give them comps & repairs to justify my price, when they see the square footage comps bring the ARV to 51k & it's just 10k in repairs they'll go no lower than 41k.
But the owner will have to go bankrupt or have it forclosed upon due to the fact that she cant pay.
Feedback would be greatly appreciated.
Thanks in advance
Hi verbatim,
Your biggest job is to make sure that you get the perceived value down low. It doesnt matter what you offer the bank, because as soon as you present them a proposal, they are going to order a BPO (appraisal) so that that they have a good direction of the as-is value. When you call in to the bank, explain to them that you are the contact person and can get the appraiser into the house and to have them call you to set appointment. Once there, it is your job to show the agent low recent comps of similar houses nearby, the repairs involved, high crime rates, etc. Tell the agent that you feel that the value of the house is only $____, and ask them if they agree. Therefor, you know what value that they are going to send into the bank.
If they want you to make an offer first, make a low offer based upon what you think you can get the value down to. Most banks will accept 70%-82% of the BPO. So if you can get the perceived value (BPO) down to $30,000, offer them 70% of that amount or $21,000. They may counter you, and you may counter them back, but as long as the numbers still work, buy it.
Another thing to remember is that if the bank feels that they can get a considerable amount more than you are offering by foreclosing the property, they will do so. Also, if your Short Sale offer is accepted, most banks will want the pay-off in 15-30 days, so you know in advance that you may need a Hard Money Loan, or find a Private Money Partner. I hope this helps!
BAMZ
thanx BAMZ, that helps me too. i didn't know i'd need to prove i have the funds to buy it. i wanted to get the price agreed upon, then shop it around for an investor.
i have a ss package here now and i'm looking at it like it's all in french. why can't they just accept a simple offer on it, for cryin out loud?! i don't know where to start with the list of shyt they want. hahahaha. i guess just get one thing at a time.
More hassle = More money
That's my equation at least with the banks and short sales. You have to show them the numbers and definitely be able to pony up the money quickly if they accept. If you can pay the amount i cash, let them know that in your contract and your talks...tell them you can close within 3 days...that will get their attention real quick.
Christian "The Solutions Kid" Beebe
[addsig]
jackman,
Another option that may work is to just tell them that you will be paying cash. They probably wont ask you for proof of funds when you tell them that in your discount letter to the bank!
In the worst scenario, you are not able to get the cash, and cant close this one, the bank simply pulls the offer off of the table! So what, you can go out and get another one!
Best of Success!
BAMZ
[addsig]
sweet! thanks. i'll try the cash offer and see how that moves 'em. like you said, worse case is they rescind the offer. no probs. i have 4 more to work on as we speak! hahaha.
also, now that i've looked at the package, only the hud-1 is something i need, everything else is fairly easy to gather. but yes, more work = more money (solutionskid) for short sales, anyway. i can't wait until i have a streamlined attack at these and i can just flow thru them with relative ease!
thanks all
jackman,
If you need a good quick easy Hud, you will find an easy fill-in form at www.easyhud.com. I use it all the time and it is great!
BAMZ
[addsig]
i'm there! thanx.
hey jackman
dont forget to have the bank "waive deficiency" of the amount thats discounted, because you are doing a short, from what i heard was that the amount shorted will be tacked onto the seller. so the bank will still be able to go after the seller even if you get a short. so its a good idea to put in your letter to waive the deficiency er something like that... dunno never done a short before...
[addsig]
right. good point. i would've surely overlooked that part in all this hubbub.
One of the keys to the short sale is understanding THOUGHOULY the criteria used by a appraiser to determine value. When you have to deal with BPOs you need to point things out.
Hi moneyprivate,
Share these criterias with the group!
BAMZ
What is "waive deficiency"?
Is that the same as put late payments on the back of the loan?
waive deficiency is when the lender does not come after the person who took the loan out for the amount of money they cut off the short sale. Legally they can, unless they 'waive deficiency' - or waive the right to come after the deficiency.
Correct me if im wrong anyone
In my most recent experience the bank asked for verification of funds even though my offer was cash. My take on that was that it was standard procedure (at least for that bank).
On the deficiency issue my recollection is that on purchase money loans, the lender is not entitled to deficiency, however, if the loan is a refi, there is a deficiency issue (at least in CA). A good friend found this out the hard way when he lost his house in a mudslide and the bank tried to come after him for the deficiency.
As Ed said, some banks may still require you to show proof of funds, even if you are paying cash.
I have never had a bank ask for proof of funds. It may be many reasons, but the reason that I speculate it is, is becasue I
1) Tell them I am paying Cash on the phone
2) Tell them I am paying Cash in my proposal letter
3) State that I am paying cash in Purchase Agreement. (of course this is contigent upon the SS being approved.)
If you are going to providethis kind of information to the bank, make sure that you do either do have cash (or access to cash) or that you have a viable exit plan!
Best of Success!
BAMZ