Short Sale

I'v been investing for over 2 years and this is my first chance to do a short sale. Are there any sites I can get good short sale info on? Most of the sites I see barely explain, or are just trying to get you excited about investing. Here is the deal...

4 Bedrooms
2 Bath
2 Car Garage
1862 sqare feet
Mortgage $71,250
Tax appraisal $103,400
Comps $108,000+
He owes almost $10,000 in back taxes.
Rehab $7-10,000 (cosmetic only)
Owner just wants out - no $$, nothing!
Offer $36,000 ???
I know I can sell it fast below market value.
I need to get rid of it fast because I am doing 3 other rehabs.
Should I do the rehab?
Should I flip it?
What are some things I can do to give me a better chance with the Loss Mitigation Dept?
Anything will help!
Thanks in advance!
Mike

Comments(3)

  • TheShortSalePro27th April, 2004

    One of the most important numbers in a short sale equation will be the confirmed, as-is, fair market value.

    It is this number that the mortgagee will base it's decision to accept or reject an offer.

    If the mortgage balance is $71K, plus $10K in taxes, the mortgagee's break even point is $81,000.

    If it's worth $108,000 in it's as-is condition, would a mortgagee agree to accept $36,000 less $10,000 as payment in full?

    Probably not.
    [addsig]

  • InActive_Account27th April, 2004

    So the taxes are added into the mortgage amount?
    The "as is"condition is probably only around $75,000. The place looks like a disaster area, but to a rehabber (like me) I know it will take little to fix. I have pictures of the property that show how awful it is inside. I don't think anyone, especially in this area would pay more than $75,000 as is for the house.
    I have a CMA coming later today from an agent friend of mine. The problem I have seen in this area is that houses over $100,000 stay on the market forever. There is too much new construction around. You can get a brand new house for under $100,000 with no $$ down etc...

    Anyway... If the break even point for the bank is $81,000 and there is $10,000 (I could show over $15,000 if I got remodeler bids) in rehab, what should I offer? Or should I not.

  • TheShortSalePro27th April, 2004

    I guess I was confused when you said that it comps out at $108,000... when now you are saying it's worth $75,000.

    In my opinion ARV has no place in a discussion about short sales... We should only deal with the here and now, and keep secret what it could be worth.

    Now, at $75,000 FMV, you've got a shot at a short.

    If it's worth $75,000, you must try to get the mortgagee to think it's worth less... within reason. As long as you can defend your opinion of value... and defend it with factual market data... and bonafide estimates for emergency/required repairs, you've got a shot, a good shot at them accepting less than they are due..
    How much less? That depends upon the strength of your Proposal.

    [addsig]

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