Question For The Short Sale Pro, And All Of You Other Savvy Investors
First and foremost,
Congratulations on your success. Here is the scenario, pre-foreclosure, 76K, FMV without repairs 92K, (home built in 1953, 1200 sq ft) owner considering Bankruptcy, Owner is four months behind on mortgage. Ceiling has a water leak, Driveway needs concrete repair, huge diagonal crack in wall (may indicate foundation issues) I am sending out an inspector this week to inspect the property as I want a concrete analysis of unforeseen issues. Spoke with bank today (American General) and the bank states that they will accept a short pay proposal but does not have a “standard short pay kit.”
1.) What should I offer on this property. If I offered 31,200 would this be too low. Do you have any experience in dealing with American General? If so, what is the most they will be willing to discount the property?
2.) Where can I find a standard short pay proposal. I want my proposal to be flawless. The plan is to include, comps, inspection, pictures of damages to the property etc. All advice is very much appreciated.
:-?
Well I think the first thing you need to do is put yourself in the bank's position...They have a $76k loan on a house worth $92k....why would they take $31k??
The goal with short sales is to convince the bank that there is a low value to the property. Maybe you can convince the bank that it is worth less. The most a bank will typically accept is 80% of FMV. More commonly my sucess has been closer to 90%.
I won't go on because I think you get my point. Here is what I would do next:
Determine the after repaired value of the property.
Determine the cost of repairs to bring it to the condition of the comps
Hell if you can buy the property for $76k and turn around and sell it for $92k, you might as well take the property subject to the existing mortgage and put a tenant buyer in there!
I'm not sure the short sale is the way to go...yet...we don't have enough information.
You must get a GC to get a proposal for repairs that is very expensive. And you trump will be foundation problems.
In FL, foundation problems caused by a sink hole almost destroy the value of a property. You can not even get insurance on a property that is within a certain distance to a property that had sink hole activity.
MyFrogger got it right on the button. some banks even have appraisal depertments and know how much properties are worth. therefore if there is substantial equity in it, its probably not a candidate for a short sale.
If you find that the crack is not a foundation problem, and want to pursue the short (might as well try if your going to do the deal regardless of weather you get a short or not) you will want to put together a package to fax to the bank. including estimates for all repairs, pictures of only the bad parts of the house (they will probably get these from the B.P.O. anyways), low Comps, A hardship letter from the seller, bank statements from the seller (looking very grim), A letter from you describing why they should take a short i.e. bad neighborhood, CRACKED Foundation, Seller might file bankruptcy. you get the picture. seems there policy isnt very strict so you can send them a netsheet instead of a preliminary hud1 if you want. you also must tell them your the contact person. so you can meet the appraiser out there and talk down the b.p.o.
i hope this helps, and good luck if you do pursue the short.
i wouldnt think they would except anywhere near 30k but depending on how bad the condition is they might. maybe offer them 45k instead of 30k lol.[ Edited by ZinOrganization on Date 12/20/2004 ]
Thanks guys for all of your detailed and prompt responses. I really appreciate it.