Is this a Short Sale Canditate?
I have a friend of mine, that is 8 months in arrears. He owes 193,000 on his 1st and 6,000 on his second. He is about to file bankruptcy, ch 7, but has not yet. It is currently listed with a realtor, and he wants out from under the payments. Comps in the neighbourhood go for around 180-210. Few minor repairs are needed but nothing significant.
Would this be a short Sale canditate?
Thanks,
Tim
Sounds like a short sale to me.
The only potential problem may be the realtor.
Happy Investing,
Stacy Kellams
How or why is the realtor a problem?
Tim
I don't know of any reason why the Realtor (or any licensed real estate broker) would present a problem. To the contrary, a real estate broker's participation is increasingly mandatory, and becomming an essential ingredient to a successful short sale.
Could be a potential ss candidate. depends upon the mortgagor's hardship.
You might end up purchasing via an assignment the 2nd at a discount for cash... then working on a short sale with the first.
Short Sale Pro,
Please tell me why a realtors involvement is increasingly "mandatory" when it comes to short sales.
Are you suggesting you let the realtor negotiate the short sale for you?
With a realtor involved you have another factor in the equation, in my opinion. One which doesn't need to be there.
Not to mention, now you have to pay this realtor a 3% commission.
"Are you suggesting you let the realtor negotiate the short sale for you?"
Not at all. That's your job. The broker's role is to list the property for sale and effectuate a sale. A Realtor isn't specifically required to be involved, any licensed real estate broker will do. The word "Realtor" as you probably know, is the name of a trade organization. It does not mean real estate agent or real estate broker. One can be a licensed broker or broker's agent without paying Realtor dues.
If the Homeowner selects a Realtor, it adds credibility to the process. The Realtor, or any licensed real estate broker or broker's agent will provide reliable comparable data, hold the good faith deposits, etc.
The foreclosing mortgagee anticipates paying a real estate commission of 4% to 5%. If you can find one willing to work it for 3%, terrific.
But the way I figure it, If your trying to short sell the property, whever is holding the lien is going to add commissions to their acceptace amount, so were paying for it anyway.
Short Sale Pro,
Thank you for the semantics lesson, but I disagree with you 110%.
In my experience, if a realtor represents the seller on a home I intend to short sale it makes the process MUCH more difficult.
First of all you have to get this "in the box" thinking person to think "outside the box" and understand the concept.
If you get past that phase, then you have to convince the realtor to let you control the process. They don't like doing that and most won't. Just slide an authorization to release information across the table and ask the seller to sign it in front of their realtor. It isn't gonna happen very often!
The realtor will be the one who wants to contact the bank on behalf of their client and relay information back to me the buyer. That greatly slows the process and causes problems where none would exist but for the realtors involvement.
As you can see, I live in Texas. We have a fast foreclosure process, 20 days from posting to sale. With a realtor involved it makes it very difficult to pull off it that time frame.
I am running into the same problem here in georgia. The listing agent is slow getting back to my agent. The listing agent wants to run everything but knows nothing. It takes too long to explain to the concept to every middle man so they can explain it to the next person, who then explains it to the owner. by then, 3 or more days have passed. When you only have one week before foreclosure, every minute counts. It seems like the agents would rather let the property go into foreclosure than relinquish control. They don't seem to realize that everyone can benefits from the short sale.
I have to agree with ShortSalePro - many short sale packages I've seen REQUIRE that the property be listed with a Realtor. The bank wants to make sure, like he said, that there is some credibility to the transaction and Realtors are held to a higher standard than Joe-Blow off the street trying to take advantage of the Seller.
Now, I do think that you SHOULD NOT let the Realtor do your negotiating for you, don't hand them that control. If they don't know what they're doing, they will take your transaction down. But you will most likely NEED a copy of that listing contract, an MLS printout, and possibly even a price opinion from the agent.
I had one client who is behind, she owes $90k, the bank wanted her to list it with a Realtor for $75k - does that tell you something about the short sale possibility? But they REQUIRED her to list it for sale.
All I can say is it definitely depends on the agent you're working with - if they want to get into a control struggle with you to do the work when they're getting paid to do nothing, WRONG PERSON. Work with them and explain what's going on, that you'll do the work and you just might need their help here and there but that they will get paid, and they'll be just fine.
Angela,
I haven't ever seen a bank try to force a listing as part of the short sale package.
If you're in a state with a long foreclosure process, it might be easier to work with a realtor.
I'd advise staying away from houses that are listed with an agent if you're trying to do a short sale in a state like Texas or Georgia which have a very fast foreclosure process.
I'll agree that Texas is a tough place to work shorts... The only shorts I've done in Georgia were riddled with origination fraud, so they were problematic.
I guess it boils down to the essence of prequalifying a short sale candidate. If the real estate broker presents a problem... then it might not be worth your time. But if a short sale makes sense, and is the only way that a sales commission can be realized, there should be no reason why a broker wouldn't cooperate.
On the shorts that I have set up, I always, repeat, always have a pre-established rapport with the listing broker, so I don't run into that problem.
Lets see if I this makes sense.
1. Get Letter of Authorization to talk to each lienholder.
2. Call and work out payoffs with them. (2nd one first or vice versa, which is better to start with???)
3. After we work out the payoffs for the 2nd and the 1st mortgage, would I then put in an offer through the realtor for the total of the payoff amounts for the owner to accept????
Would the owner initially need to give me anything else besides the authorizations??
Thanks for all the replys
Tim
Shorts can be done here in Georgia. I know investors here who do it fairly regularly with a 80% success rate.
Typically it just requires asking the mortgage company to put a stay or hold on the foreclosure to give you time to work out a deal.
-Sunrisetraveler
[ Edited by Sunrisetraveler on Date 06/27/2003 ]