How Do I Make This Deal To Work???
Everyone,
I need a quick advice on how to proceed with this deal:
I am working with homeowner in foreclosure. FMV of the property is $650,000-$660,000. There is a 1st of $500,000 and 2nd of $100,000 both held by the same bank. Arrears are approximately 6 month. Property is in supreme condition in the upscale neighborhood. Couple is divorcing.
Bank is not willing to entertain a Short Sale (they already have ordered a BPO and convinced they can have they money at the sale or after). However, they would consider discounting the mortgages and selling them. I already have a buyer who is interested to buy the notes and take possession of the property. He will not pay more the 80 % of FMV. Homeowner wants to get 30K out of this deal and let the property go.
How do I proceed and negotiate this deal with the bank?
Do I need to make a combined offer for both mortgage notes and if yes then how much should I offer? Or should I try to negotiate each mortgage note purchase independently despite that they both held by the same bank and present 2 offers?
Taking a property Sub 2 is not in option since there is no way it will rent for the amount equal to the monthly payment and taxes.
I need to act quickly.
Thanks,
PerlUser.
Perluser,
Your first problem is the homeowners expecting to get $30k out of a property that is about to be foreclosed on them.
Most investors I know would buy this property at 70% of FMV. That would put the figure at $462K if FMV is $660K.
Your note buyer is willing to pay 80% of FMV or $528K. Now you say that your homeowner wants $30K. This would leave a profit of $36K which doesn't sound bad.
Now, the only problem will be for you to convince the bank they should discount the notes by $138K. This is probably not reality.
Once again, the profit your homeowner wants is probably standing in the way of you making a deal. I'm sure you have informed your homeowner's of the drastic negatives to them concerning foreclosure. Try to renegotiate with them.
Just one man's opinion. Other posters may have a better way to tackle it. Good Luck.
Dave
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"Opportunity is missed by most people because it is dressed in overalls and looks like work." (Thomas A. Edison)[ Edited by dealfinder on Date 06/10/2004 ]
Well, I am a little confused. I see that the bank is willing to accept a discount on the notes, but not a short sale? What the diff? The end result is that they will get paid less than the amount owed to them.
Just thought to point that out.
I would suggest that you set up a purchase agreement and sell the contract to a serious buyer. If the bank is sure that the BPO is showing that they will get their money back, there must be some room for your profits of 10-20K for flipping the contract.
Thanks for the response guys.
Jgasdaglis,
This particular lender has strict criteria when it comes to the Short Sale of the high end properties. They simply will not budge if they dealing with numbers of over half a million. Discounting the note, on the other hand, is handled by the different department and they have different guidelines.
I will try to get a discount as much as possible from the bank and naturally negotiate with the home owner down from the $30,000 they looking to get from this deal.
My question is though, how do I approach the bank for the best rate of success?
They are holding both notes. Do I send one offer for both of them or a separate offer for each of the mortgages?
Thanks,
Perluser.
I like th enote option personally.
I just bought a$163,000 note for $90,000. Got the homeowner to accept a deed in lieu and some u-haul money, assigned the deal for $10 grand to an investor who turned it to another investor ffor $125,000 All in 48 hours.
What a rush! It was worth it - check out the disccount on the note and proceed accordingly.
C- :-o
Cpifer,
You understand how I feel!
I also think that the strategy I have picked is a right one. Just want to make sure I am using the best possible approach to present the offer for the discount to the bank.
Just curious,
What did you claim as a reason for discount in your deal?
Thanks,
PerlUser.