Posted by wm-pa on March 08, 2003 at 14:02:36:
Nate, point well taken, I hate wasting time!
Speechless with short sale - Posted by wm-pa
Posted by wm-pa on March 06, 2003 at 20:02:07:
I have a pre-foreclosure that the owner has not paid anything for 3 years (was in bankruptcy, but the filing was cancelled) and has 2 mortgages on the house.
1st- principle balance= $28,242.27
late fees,lawyer fees
and penalties the toal
to payoff 1st mortgage = $46,889.38
2nd mortgage=$14,987.92
fees, penalties
for a total payoff =$17,265.19
The house 3/1 row with updated kitchen, needs at least 10k to make livable. Planned on L/O or flip.
Comps are 39K- 41K.
I have not talked to first mortgagor yet. I did talk to the 2nd mortgagor and said that the owner is going to let the house go into foreclosure and if I could get a “short” sale kit. Carol, the rep for the bank said she would take an offer right now. I said I would have to see what I can get done with the first mortgage, and could I call her back in a week with an offer. She said yes, but send all the documents you need to justify your offer.
Do I tell the 2nd mortgagor that the house is worth much less that what is owed on the 1st mortgage? Can I low ball the 2nd mortgagor, say $1,000, or will this insult them?
Also Do I tell the first mortgager that I am making on offer on the second mortgage or do both banks talk to each other and know what I am doing?
Thanks,
wm-pa
Re: Speechless with short sale - Posted by Nate(DC)
Posted by Nate(DC) on March 06, 2003 at 22:17:47:
Why even mess with the second, until you know you will get the first to discount also? Since the first, along, is greater than FMV, there is no deal unless the first will discount.
NT
Re: Speechless with short sale - Posted by Chris
Posted by Chris on March 06, 2003 at 21:48:11:
WM-PA,
Low ball the second mortgage … $1000 is probably a nice start. A little negotiating tip: make your offer for some oddball number like $1077.69 and tell them that this is all your formula will allow you to pay for the 2nd. It will give your number some credibility (learned that from Roger Dawson at the CREOnline convention a couple of years back).
In most cases, if the 1st and 2nd are held by different lenders, they do not communicate. The 1st mortgage won’t be very willing to take a discount if they know a 2nd is getting some money, so work the 2nd first and when you get their agreement for a discount, then work the 1st down. When you get ready to submit your short sale package, www.EasyHUD.com can help with creating the net sheet the lenders will ask for as part of the short sale package.
Re: Speechless with short sale - Posted by wm-pa
Posted by wm-pa on March 07, 2003 at 16:37:06:
Nate,
That was my intention, to talk to the 1st mortgagor then the second. I already sent a message to the 1st mortgagor for a short sale kit, and it was when I was talking to the 2nd mortgagor asking for a short sale kit when Carol bluntly said, " make me an offer now". This is why I posted my post. I wasn’t ready to make the second mortgagor an offer until I talked to the first, but now I have a post from Chris who states the total opposite advice from you, I may be wrong but Chris’s advise sounds more logical, as I know the 1st mortgagor likely knows about the second bank. It seems to me that the 1st mortgagor will expect any money I gave to 2nd mortgagor plus anything below fmv.
Again I might be wrong, which is why I posted in the first place.
Thanks,
wm-pa
Re: Speechless with short sale - Posted by wm-pa
Posted by wm-pa on March 07, 2003 at 16:47:21:
Chris,
I think that is a great idea, “my formula” amount!
I will use that along with the trying to discount the 2nd mortgage first, then the 1st after I get the amount from the second. Carol from bank #2 sounded eager to deal when mentioned the owner is going to let the house go into foreclosure, I didn’t even mention to her the balance for the 1st mortgage or the FMV of the house. I figured the same as you said, if the second discounts most of the mortgage I will then know what I need from the 1st. Thanks for the reply.
OH, one last thing, Do send her all the same short sale documents to the second mortgagor as the 1st? I know not to mention bank 1’s name on the forms to bank 2, but do they all get the same information?
Thanks,
wm-pa
Re: Speechless with short sale - Posted by Nate(DC)
Posted by Nate(DC) on March 08, 2003 at 09:29:59:
No, I think Chris has a valid point; I was just saying that if the first turns out to say “we will not take a dime less than we are owed”, you just wasted a lot of time.
NT