Value 70k, 1st Is 93k, 2nd Is 14k
hey fellow investors,
here's a short sale we're working on... the house is worth about 70k. The 1st is foreclosing. The payoff for the first is 93k; we got it discounted to 48k.
The payoff for the 2nd is 14k. I really don't want to give them anything as they won't get a dime if the 1st goes through the foreclosure... but they want something. What should we offer? Is there any way to just get rid of the 2nd?
Thanks.[ Edited by mcmoxie on Date 08/25/2003 ]
my rule of thumb. But up to you.
I would find out when the 2nd was loaned. Figure in how much was paid on it (most will be interest anyway) and work with the number of amount loaned minus the payments. IE: principal 15,000 - total payments of 400 x 24 which is 9,600 =balance of original loan $5400
Could would offer them $3,700 roughly 30% less than the balance. You could offer them the $5400, I might depends on who the holder of the note is. (I am in a small town and if its a local I would want them to be on my good side I may have to deal with them again so I would look a it a little differently besides I have firm ethics about some things) But I also believe in discounting. They already got $9600 of money out that they loaned. They loaned it for free they get no interest. You could offer a little more than this too. It depends on you. Giving them a little more they dont get what they expected but they dont lose it all either.
Bad break for them but they can write off the loss. Run your numbers and take a jab at it.[ Edited by Dreamin on Date 08/25/2003 ]
Excellent discount on the first... but will they allow a nickel to be paid to the second?
Usually, I try to get the second to agree, first. Then I can present an articulated HUD 1 in my proposal to the first mortgagee. How were you able to identify the payoff to the second in your HUD 1?
In either regard, you might want to purchase the second via an assignment for a couple of thousand. Then, your accurate and lawful HUD 1 would reflect zero payoff to the second mortgagee (you).
Agreed. Work the inferior liens first. We'd always offer a lien like that 2K and bargain upward. Your position is greatly compromised if they know about your success with the first.
I like ShortSalePro's idea of the assignment of a discounted note - that seems simpler. We've never done it.
Generally speaking, if you try to negotiate the junior liens first ... can you offer $ to satisfy the junior liens "contingent upon" acceptance of your short sale proposal to the senior lienholder??
I just wondered whether you have to risk buying out junior debts when you're not yet certain that the whole deal will succeed (i.e., the senior accepts your offer).
Make your offer to purchase the mortgage via assignment "subject to due diligence" to be completed within 10 days following mortgagee acceptance."
You've then identified the price at which they'll sell, and bought yourself 10 days to continue working with the first.
I would never recommend that you shell out a nickel for any junior without first having all bases covered... and all contingencies met.