Ss Candidate?
Can someone assure me this home may be a short sale candidate?
I have found a home that has been vacant for 2 years, but (oddly) just now going into foreclosure. I haven't been inside the house yet but I understand that some kids broke into it and started a fire. I could see some soot on the front door but the roof isn't burned and nothing is caved in(at least from the outside). Also, there is a window that I guess was left open for a time and now a huge shrub is actually growing through the open window into the house; it fills the window opening. It is likely in need of major repair. It has a 2 car garage conversion that I am unsure was done correctly.
If I can reach the owners, do you think this might be a short sale candidate? This home was built in 1970 and is small. Approx. 60% of the ARV is owed to the lender and there is no deal here at that cost. I am guessing it may need 20--23k in repairs based on $15 a sq. ft. to gut it.
Approximate ARV: 95k
Owed to lender, approx: 59k
I would think it would cost the bank "x" amount to foreclose (if no one buys it at the auction), then another 20k to repair, then list with a realtor and loose another 6%.
Am I figuring right? And there is only 14 days to the auction. You only get 21days in TX,
Thanks for the advice.
Also, "about" how long would it take contractors to gut a 1250sq. ft. home and get it in like new/decent condition?
:-?
Unless you can document that the dwelling is uninhabitable and in dire need of a gut-rehab.... the mortgagee won't be too inclined to embrace your estimate for repairs...
The more realistic your estimate for repairs... the more realistic your chances at securing short sale approval.
It's rare that a foreclosing mortgagee would effectuate repairs to sell as an REO... they don't like to write checks...
To prequalify as a SS candidate... you would have to know the confirmed AS-IS value of the property. The as-is value is the basis for all short sale negotiations. The ARV is meaningless to the mortgagee....and the ARV is meaningless to the short sale prequalification process... though it is an important element in your exit strategy.
The vacancy may prove to be problematic, too. Most shorts require owner occupancy... but there are ways to sidestep that issue. The type of mortgage will determine short sale criteria.
So, what's the as-is value, what is the status of the mortgagor (in bankruptcy?), and are there any other liens against the premises, and what's a realistic estimate for essential repairs?
[addsig]
Thank you for all the info. Some members of my local REI Assoc. have let me know that it is too late to do a ss on this property (cause of our 21day foreclosure process). One suggested I could bring the loan current, wait a few months, then try a ss. But I don't have that kind of cash adn I don't want to sink that much money on a 'what if'.
Thank you for your help. I am still a newbie and learning and a lot of what you said helps me out a lot.
I may just watch this property and see what happens.
Thanks again.
I'm sure that the members in your REI club know best.... (eye roll, shaking my head)
There will be no slam dunk short sales... they are all riddled with obstacles. You'll either have to learn to circumvent the obstacles... or you will never, ever, do one.