Short Sale With WaMu On 1st And BankOne On 2nd
I have a distressed homeowner with a house that's probably worth $106,000 in decent shape. It needs a bit of work (leaks in roof, missing garage door, unfinished wallpaper in some areas of house, etc.) The 1st is with Washington Mutual for $70,000, the 2nd is with Bank One for $24,500.
Both the lenders will entertain a SS. Bank One (2nd) said to negotiate with WaMu (1st) first, and then WaMu would let them (Bank One) know what was left over for them. I was surprised by this. I was prepared to negotiate with them both separately.
If the 1st is $70,000, and the BPO comes back at about that (I'm hoping it'll be lower, but not sure if/how I can justify it) is it anyone's experience that the lender may still take less, considering the expense they'd incur sending the property to foreclosure?
Thanks for any feedback!
"I have a distressed homeowner with a house that's probably worth $106,000 in decent shape"
What does this mean? Are you saying that with all the repairs completed it might be worth $106,000, or, in it's present, as-is condition it's worth $106,000?
If it's worth $106,000 now, then forget about a first mortgagee short. They'll settle for payment in full. There might be some wriggle room with the second.
Sorry I wasn't clear. It might be worth $106,000 IF it were in decent shape, which it isn't. I could probably get estimates for about $30,000 in repairs.
It's definitely a short sale candidate, I just was mentally prepared to negotiate separately with each lender. The 2nd kinda surprised me when they said to negotiate with the 1st and then come to them. They seemed to be expecting the 1st to tell them how much they could get out of the whole deal.
The application and accompanying Proposal should be sent to each mortgagee.
The first will want 100% of net proceeds. Try to have them reduce their recovery by the anticpated cost to foreclose, and apply that to the second's payoff. Be prepared to sweeten the offer to the 2nd.
If it's a good opportunity, consider that your opportunity cost.
Read "Short Sales: Childs' Play, or Not" which stresses the importance of sharing inarguable information during the negotiation process.
ShortSellPro, What's the link to" "Short Sales: Childs' Play, or Not" ( he probably can't search the site.)
Just a follow up to how this deal all ended up working out. The 1st would not negotiate with me. I bought the note on the 2nd for $3K. Then I brought the 1st current and sold the house for $87K to an investor who wanted to rehab it. I went to closing and collected my money as the 2nd note holder (I accepted a short on what was owed me, since I had gotten the note at such a good price.) The homeowner avoided foreclosure, the other investor got a house to rehab and I made some money too! That's a win-win-win! Just like you guys said--it will work if I just get out there and do what you say. Thanks for all your support!
Congratulations! Nice way to work through that. RE-invest that money and go out and get another one!
BAMZ
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