I am not sure I’d go through with this deal. There is not enough margin if you are a flipper. You don’t want to get the property for unless you can get it for 75% of fair market price or less.
You are looking at a deal that could potentially cost you around $120K. Here is how I arrived at my numbers: $106K + 3 months back pay and fees + repair + holding fee.
I am assuming the 1st is foreclosing in which case they probably won’t want to negotiate.
The step-by-step is as follows:
Get the auth to release loan info signed by all parties. Verify payoff amount, reinstate amount, etc. from bank and the foreclosure attorney.
Do the title search
Get the estimate to repair the property
If the property is in bad shape see if the 1st is willing to negotiate.
At this point you should be able to decide whther you still want to go through with this deal.
I?m scheduled to meet with a motivated seller tomorrow over his foreclosed property. This property is a small one. 850sf main floor and 850sf basement. I?m not sure whether the basement is fully furnished or not. If it is, the market price should be around 130k. If not, 120k. He currently owes 106k on the house and has been 3 months late. I drove by the place and it appeared that the house needs some work. Not sure how much as I haven?t seen the inside.
House is scheduled to be auctioned off soon. I want to make a short sale offer to the bank but not sure how to proceed. Can someone provide me with some steps by steps instructions. Things like what I would need from the owner prior to talking to the bank (authorization to release loan information letter, contract to protect myself (what contract?)?
Please help as this would be my first potential short sale deal.
Posted by IB (NJ) on January 16, 2003 at 16:45:10:
with a lot of what Joe said. But you should be able to find out from the mortgage company right away if they’re open to a short sale. As soon as you fax them the auth. letter, ask them if they are open to short sale. Let them know that you are trying to work with the homeowner and buy the place but only if the bank is willing to short the amount owed. Other than that, it’s going to cost them a lot to foreclose as no other investor will touch the place at the curent amount owed.