No more Short Sale games!
Hello folks, I heard from the 2nd mortgage lender on the short sale deal I'm trying to solve. To refresh, it's $100-$105k comp house with $98k on first mortgage and $50k on 2nd.
I offered $40k to the 1st lender and $10k to the 2nd...after the 2nd bank received it they called the homeowner and bawled them out about how they wouldn't waste time "playing my games" and were closing the case.
I responded with an explanation and apology that I wasn't trying to be offensive, but that with such a skewed situation already, I need equity to work with. I offered them $25k, and plan to offer the 1st mortgage holder $50k.
Thoughts, opinions, spare miracles?
Andrew
This probably wasn't a qualified short sale candidate. No every scenario indicates that a short sale is warranted.
If the FMV is as you indicate, the first won't budge. Don't waste your time.
The second has to be wondering about the appraisal that was used to justify making a loan.
In the case of foreclosure, does the 1st mortgage have priority in receiving funds from the sale or auction over the 2nd? I'm guessing that's why you say they won't budge in loan price, right?
I haven't had a chance to communicate thoroughly with the 1st lender; I've got to send them the financial statement I had the homeowner complete as well as a revised net sheet/offer sheet. I'll update when I hear from them.
If 1st mortgage won't budge, I'm not bothering. I want at least 20k equity...I can't sell it to someone with no equity and make a profit.
Andrew
TheShortSalePro,
Glad to meet you.
Why don't you give the community here at TCI what you feel from your experience constitutes a prospective short sale deal where the investor makes money.
There is no since chasing rainbows with out some knowledge of what to look for to start out with.
Welcome on board this board, look forward to seeing you helping the new person here at TCI.
John $Cash$ Locke
I'ts nice to be welcome. Thanks. A properly conceived and constructed short sale can result in profit. Key elements for a successful short sale include a cooperative Seller; a property in disrepair; a patient Buyer willing to accept the property in an as-is condition; and a well constructed, well supported, and forward thinking Proposal.
Most casual real estate speculators overlook properties that appear to have little or no equity... A successful "Short Sales" can create equity and opportunity when none exisited.
Short Sales can be 'stand alone' transactions, or can be used with other acquisition strategies.
Over the past 20 years, I've learned by trial and error in what is a dynamic industry. Now, though it's hardly a cookie cutter application, I can prequalify a short sale candidate and prepare a SS Proposal
that speaks to the needs of the mortgagee (in a language that they understand and don't find adversarial), the needs of the Seller, and the needs of the Investor/Speculator.
Though I've been doing this for years, I learn from each one. As I indicated, it's a dynamic industry.
I have constructed short sales from both sides of the table: from the mortgagee side (as a corporate, nonperforming asset manager for a portfolio that included about 10,000 non performing loans), as an Investor, and as a Consultant structuring shorts for speculators, investors, and individual homeowners.... a hired gun, so to speak.
I understand that the Hosts for this Board
have a course on Shorts. I'm confident that their course will address all questions posted here.
My "adviso", "Short Sales: Buy the Book!" is more for use by real estate brokers as a desk reference... and for those who have a foundation in real estate.
I was under the impression that the concept and theory of short sale is too complicated to generalize. There are so many variables involved, I don't see how one can pick an "ideal" short sale. That would be like judging a book by its cover. One deal may not be as profitable as the next deal, but it simply depends on the person and how much effort they're willing to give.
Granted, I'm sure there are circumstances where you waste your time; a seller who changes their mind, or a bank that won't budge. If that's the case, its their loss.
I have no experience or proof to back this up; the deal I'm working on has zero equity, the property is in good condition and is only four years old and could quite possibly be a massive waste of time. Even if I do manage to negotiate a decent price from the 1st and 2nd lenders, I have no buyers lined up and can't find any.
As John L. said, it takes some money to get started. Unfortunately, I have zilch. In fact, the only reason I still have internet access is because it is an auto-debit. So I can't afford to advertise for a home for sale. I'm just crossing my fingers and praying for a miracle.
My point is, what I believe, at least from what I've read here on TCI, is that it's pretty darned hard to determine a deal based on a generalized scale. Individual circumstances will dictate the situation; in addition, what one might consider a waste of time might be what another would consider the last, desperate attempt to salvage their financial ruin.
I'm very familiar with the latter in that last statement.
Andrew
[ Edited by wonderboy1999 on Date 02/15/2003 ]
BTW, Update on the situation with the 2nd lender:
They received my email of apology and my revised offer for $25k. They have invited me to send a new net sheet with an estimated closing date. Perhaps it still might be possible?
Andrew
Wonderboy, Andrew,
It is my unserstanding and sometimes my experience that you don't need to advertise for a buyer for your shortsale deal if it goes thru---you could just call the "I buy houses" ads in the paper and see if anyone wants it.
I've read that the rehabbers will by these if they are a "deal".
All the best to you---am enjoying your journey from the beginning---on this site---til now,
Mel