Offered Too Much On SS!
Made an offer to lender way below loan amount (-60%) based on my brief walk thru inspection. It has been a month and the owners have already moved out and are willing to cooperate with whatever I ask. Problem is that after hiring a structural engineer/home inspector, it seems as though the home will cost much more than budgeted for repairs(+30%). Lender is in receipt of ss net sheet and has agreed to initial offer without a BPO, hardship letter, or any of the other documents that an ordinary ss would require. They are motivated to get rid of this property due to 3 years of none payment(several bks).Can I now go back to them and get the ss offer reduced to accomodate for the structural
repairs and excess $$$$ that will have to be spent? In the future I will have the inspector come in before the offer. :-?
Since the Homeowner has been thru a bankruptcy, chances are that they no longer have a personal responsibility to pay therefor, they don't have to provide a hardship letter. I'm certain that the lender has had BPOs done as a matter of servicing the loan during foreclosure.
You've already furnished a net sheet and, presumably a contract to purchase.
I would simply send the Sellers a letter rescinding the offer due to condition, and include a copy of the home inspection report. Send a copy to the lender. The letter isn't so much for the Homeowner as it is for the lender.
Include a personal note to the lender saying that for you to pursue the property, the lender would have to be willing to consider $X as a net. Ask for their reply in 3 business days.
Pro 1st of all thank you for the concise solutions/answers to the many post that come in regarding the SS process. Your responses are truly insitefull and always on point! Thank you, your presence in the ss forum is much appreciated and sorely needed. :-D
By the way when I go back in I want to try and save as much face as I can with the lender due to the fact that they have basically opened the vault for many of their non-performing loans. I do not want to seem as though I am beating them up too much on this deal. They are infact taking a huge loss even at my original offer. Balance 140k, 55k offer, 185k Arv. Although the property will need @65k in repairs, including the structural
problems, I don't want to appear as being ungrateful in their eyes.
Any encouraging responses are appreciated.
Even with the numbers you have now it doesn't look like a bad deal. 55K + 65K = 120K for property. FMV = 185K . Thats 65K to be made.
Dumdido, you are right 65k in good, but I have to put up @120k CASH to get it.
Would'nt you agree that spending 100k CASH & getting 85k would be better?
Once you factor in market time, vacanies,
vandalism, closing costs, etc. I am going to need that extra 20k to get where I want to be.
Thanks.
[addsig]
Pro just an update on this deal. I went back to lender and they refuse to accept my lower offer. In the future I will always get the formal inspection before I start any offers to lender.
Thanks again
exactly who is this structural engineer/home inspector that you hired and told you it would cost that much, i hope he's not the contractor you are going to have do the work. any ways maybe you could get a second opinon on the cost of the rehabb? will it affect the marketability of the house if you dont fix this so called structural problem?
Quote:
On 2004-11-12 21:41, ZinOrganization wrote:
exactly who is this structural engineer/home inspector that you hired and told you it would cost that much, i hope he's not the contractor you are going to have do the work. any ways maybe you could get a second opinon on the cost of the rehabb? will it affect the marketability of the house if you dont fix this so called structural problem?
Zin, no the contractor(S) and the structural engineer are totally different parties, they are not connected at all. I got 4 estimates for the exterior (windows, porches,siding,doors,soffit,facia,gutters and roof)
each being higher than the previous one. (32k-38k)
Also the interior will need a total gut, drywall, bath, kitchens, finish basement and attic. (35k-45k)
The structural engineer was ordered to come out by the lender who I have the rehab loan with before they will release draw monies!
Sounds like alot of work. it might not be worth it unless you can negotiate with the contractors very low prices or if your able to buy the materials at contractor discount prices and pay them by the hour for installing it. obviously you are the only person that can be the judge of that. also i know there are alot of rehabb investors out there that will take on major jobs like that with only 20 - 30k profit for them. so maybe if you havnt started marketing it yet, market it to cash investors as- is, at a discount so there is enough profit for every one and you wont have to get your hands dirty. just an idea.
Quote:
On 2004-11-13 13:08, ZinOrganization wrote:
Sounds like alot of work. it might not be worth it unless you can negotiate with the contractors very low prices or if your able to buy the materials at contractor discount prices and pay them by the hour for installing it. obviously you are the only person that can be the judge of that. also i know there are alot of rehabb investors out there that will take on major jobs like that with only 20 - 30k profit for them. so maybe if you havnt started marketing it yet, market it to cash investors as- is, at a discount so there is enough profit for every one and you wont have to get your hands dirty. just an idea.
Zin, yes my exit strategy is to just clean up the property and gut everything and possibly do just the outside then market to a rehabber wholesale for 15-20k profit.
Ultimately I would like to take on the albatros, but continue to hesitate for some reason, as repairs have a tendency of always costing more than estimated.
I will have to decide by next weekend but I will start contacting rehabbers/wholesale investors now.
Thanks for the input man.