Short Sale Help On Pre-forclosure
I originally posted this in the foreclosure forum, and didn't really get my question answered, or I was asking the wrong question.
I called on a Pre-foreclosed property and he currently owes $336,000 ($236,000 and $100K on a 2nd mortgage). It was a new build in 2000 (sale transaction recorded on 3/15/2000 @ $232,330). The current assessed value is $287,100 w/ 2002 annual taxes @ $1,495.18. Based on the preliminary title search I performed, the highest comparable sale was @ $230,000 on 09/01 ( 1.5 story 3BR/2BA w/ detached garage).
The property has been vacant for 4 months and the foreclosure date is set for May 30, 2004. The gentleman I spoke with stated that he is going through a divorce and avoids the property due to emotional issues.
Offer price = FMV-Profit-repairs-Holding costs-acquisition costs. What would you do in my situation? Can I short sale both the first and second mortgages if I can justify the value of the house? How much would I offer on the 2nd that still remains for the short sale? 5K, 10k? If he does get foreclosed, they arent' going to get anything. Any help our direction would be greatly appreciated.
The first mortgagee seems safe and will probably be made whole at foreclosure sale. The second's situation is at risk. You've got to ascertain the value before the mortgagee would consider a short.
You can be sure that they have an appraisal and are pretty sure what it's worth. If they share your estimate of value, you might be able to have them accept a short payoff. If they don't share in your opinion, you'll have to devise an argument that denigrates their perception of value...
Depending upon the mortgagor's financial situation, the second mortgagee may agree to release it's security interest but may not agree to forgive the deficiency... in which case your Seller will have no house, but remain liable for the debt.
[addsig]
Thank you very much. I appreciate your prompt help on this!