Short Sale Success

Short Sale Success

Atlanta, GA · Member since 2011 · 65 posts · 0 votes

ALL:

Good morning. What's the deepest discount you received on a short sale? Was the property in pretty bad shape, or was it fairly decent? What was your exit strategy, and how much total profit did you receive from the deal from start to finish? I've heard of people receiving HUGE DISCOUNTS on properties and turning around and either rehabbing the property and making really good money ($40,000-$60,000+), and then I've also heard of people making over $200,000 with wholesaling a single short sale they received at a huge discount. If you're structuring deals of this nature, or even on smaller scale but have a good return, I'd love to read your stories and find out the steps you've taken throughout your investing career to master the art of short sales. I've been researching online and of course I come across some of the gurus and their success stories, but I would really like to hear success stories from the BP community.

Thanks in advance for your response, and I hope you enjoy your weekend :)

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  • J ScottPro Member
    Moderator
    Investor · Sarasota, FL · Member since 2008 · 18k+ posts · 17k+ votes
    13y

    We've purchased many short sales and every transaction will be different. The "discount off list price" is absolutely meaningless, as list price generally has nothing to do with the value for a short sale. Some listing agents will list the short sale at around the BPO value, some will list significantly lower in order to attract a buyer and others will list significantly higher if they're trying to protect their client from deficiency implications.

    Ignore the list price and offer what you it's worth as an investment to you...

  • Will BarnardPro Member
    Moderator
    Developer · Santa Clarita, CA · Member since 2008 · 15k+ posts · 10k+ votes
    13y

    Agreed with J.
    As far as individual specific success stories on short sales, I can give you a recent one (last year) from my portfolio. Purchase price was $210k, rehab was $55k, sold it for $359k to FHA buyer. Was $369k but second appraisal came in lower than first so we adjusted price. I cleared about $55k after resale and holding costs and borrowed $200k so my cash on cash was 85% and I did it in 4 months.
    This was done in a very, very competitive market of Southern CA where finding good spreads in that type of value range is difficult at best.

    Most of my acquisitions are REO deals and not short sales, but short pays are a larger majority of the inventory compared to REO so you must work them if you plan to consistently obtain deals.

  • Atlanta, GA · Member since 2011 · 65 posts · 0 votes
    13y

    Thank you both for responding. Also, I know you can obtain proof of funds letters online for short sale transactions, but for a newcomer trying to also get into REOs, do you know of any companies or hard money lenders that will fund rehabs? There's a person that uses hard money to fund their rehabs, but I'd have to pay them dearly for the information and I don't have that kind of money to join their A-List.

  • Investor · Reston, VA · Member since 2011 · 683 posts · 191 votes
    13y

    Hi Tara,

    We are in the same neck of the woods. Short experience has been mixed for me. I've gotten some pretty decent deals (20K-40K net) and have wasted a lot of time on others. The problem now is that they are priced very close to retail if you are using MLS. I have one now that has been going on almost a year. I really don't care if I get it or not. The BPO has expired 3 times and gone up every time. The best bet is having an inside track. I'll throw in an offer, get it UC, but then forget about it. If it works out - great. But I don't expect that many will.

  • Atlanta, GA · Member since 2011 · 65 posts · 0 votes
    13y

    Cheryl, thanks. I was marketing in NOVA(mostly Arlington and Alexandria) but it was rather hard to get things going. I've since relocated and will need to update my profile.

    What other types of investing are good in the DC/NOVA area? I plan to hit the ground running in that area in another year or so.

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