QUESTION ABOUT SHORT SALE PROCEDURE
HELLO EVERYONE,
Just a little confused on what to do next. I've been contacting homeowners who are in pre-foreclosure but what do I do once I get someone interested. Can someone please tell me step by step what I'am to do once I find a motivated seller using this example.
Homeowner owes 100k
FMV is 160K
Owner agrees to 120k
Now what?
Thanks in advance.
Ruben
Hi Ruben,
Honestly, if you are not sure which direction to go with a short sale, I would highly reccomend that you thoroughly read and re-read the past and present post in detail and or purchase some low cost short sale material. If short sales were something that you could be told in a few sentences, I would certainly do that for you.
The good news is that based on this example, there is no need to Short Sale this property, and if the bank had these same figures, there is no way that they would approve the short for you anyway.
In regard to your question on what to do next, my answer would be simply . . . . . Buy it, Profit, Rense and Repeat!
BAMZ
THANKS FOR YOUR REPLY BAMZ. SO IN THIS SITUATION THE BANK REALLY HAS NO SAY ON WHETHER OR NOT THE OWNER COULD SELL THE PROPERTY TO ME. IS THIS CORRECT?
It sounds like you have the right situation (If the seller is OK to walk away with NO money): Homeowner has been given notice that the foreclosure process has begun (f/mortgage company's attorney), and you are now in that window of opportunity to buy the house from the homeowner prior to the courthouse auction.
Part of doing a short sale is building a case to present to the bank/mortgage co., to show them that 1)This house needs some repairs - so you need to get maybe a General Contractor to come and give you an estimate for the repairs and for whatever it will take to get it looking nice. This $ amount is what you will be trying to subtract from the $ amount owed on the mortgage. 2) Add in some lower comps for the area (only if they exist) and 3) a sympathetic letter from the homeowner explaining why they can't afford to make payments any longer - and then you have about only 25% more information than what you may have now.
I agree with purchasing a short sale manual. My favorites are Dwan & Sharon's SHORT SALE SECRETS - but that's just me, and I wouldn't call it inexpensive. Hope my 2 cents helps!
Thanks for your help Gingerg. But if I was to complete a transaction like the one I gave as an example is that a short sale? I've had people tell me that it's not a short sale because I don't have to deal with the bank. Is this true?
Thanks in advance
Ruben
Ruben,
The example that you provided above is not a short sale, it is simply buying a house from the owner at an agreed amount.
A short sale is when the bank agrees to take less than the amount owed. Here is an example.
FMV $160,000
Loan Balance $155,000.
If you present a sound case to the bank as to why they should accept your proposal and take less than $155,000, you may be able to buy it for $125,000! There is nothing strategic amount that discount, simply an example.
Hope that helps!
BAMZ
This is not a short sale. Write a contract for $120,000 and close as soon as you can. He gets 20K, the bank gets there money, and you get equity. Done deal.