Posted by Ben (OH) on December 20, 2002 at 06:50:51:
Short pay is more an art than a science. It is not simply making a low ball offer. Lenders are receptive to offers, but the proper presentation of your offer can increase your odds of success.
Know your exit strategy before proceeding. Perform a lien search.
The contract with the seller can indicate a price or it can be blank. The reason for no price is you don’t know what the final price will be. If you are uncomfortable with this then simply go back to the seller and have a new contract signed with the final price.
I’m not quite sure how to handle the purchase agreement. For example, a 100k property and i want to start a bid at 50k. Do the sellers (even though motivated) balk when you ask them to sign a purchase contract for 50% of the home value? And lets say i get that 50k contract signed, then negotiate with the bank for 60k. How is that handled for closing as i have a 50k signed contract, and the bank will take 60k for it. Could some of you pros set me straight here. Thank you!
Posted by Mike G on December 20, 2002 at 13:49:41:
I have not done a short sale yet, so I’m certainly no pro. However, I do have a very experienced mentor who has advised me to write the following on the line you normally write the price in the contract: “whatever it takes to pay off all existing mortgages and liens subject to buyer’s approval.” This way you can lock up the property and negotiate w/ the banks…and you have no risk.
It depends on whats owed on the house. The seller is in foreclosure and is basically losing his negotiation power with the bank. The bank is in control unless the loan can be re-instated. If you can get it for the 60k…depending on the repairs and you have room for at least 10k worth…get the house, it sounds like a good deal. If you try to under cut the bank with the seller at 50k, the bank will most likely foreclose and you lose.
My example was not a real deal, a what if. I just want to know how it works when you sign a contract with seller (a prerequisite) for 50k then agree to a price with the bank for say 60k? How does that all work out at closing?