Short sale offer?? Can I get deals or not?

I don't think that's the same thing. I mean, if they sell it for what they owe, they get out from under it but lose their equity. The bank gets their money. In a short sale, the bank determines the amount of loss they're willing to take.

Edited: 06/26/2010 at 05:10AM

Mark Gingrass

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Icon_minipost May 08 '08, 01:21 AM

It appraises for 78K yes. I guess that would be the ARV though.

What i'm asking is if someone can offer $70K on the house because it is in the forclosure process.

Edited: 06/26/2010 at 05:10AM

Jon Holdman

Real Estate Investor · Denver, Colorado

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Icon_minipost May 08 '08, 01:45 AM

If someone owes $78K on a house they could sell for $78K, they would still come up short due to the closing costs. Typical closing costs are about 8%. So, the net on a sale for $78K would only be about $72K. The seller would need to come up with $6K to close the deal.

So, even with these numbers, a short sale would be in order. If the seller can't come up with money and can't make the payments, the bank might accept $72K as the payoff.

The owner has no equity to lose. Realistically, unless you owe less than 92% of what you could sell a house for you have no equity.

I don't think you should worry about what the bank with take other than as a factor in whether or not you can close the deal. Figure out what the house is worth to you. Offer that to the bank. If they won't take it -- next!

Edited: 06/26/2010 at 05:10AM

Jon Holdman, Flying Phoenix LLC

Christian Malesic

Real Estate Investor · Harrisburg, Pennsylvania

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Icon_minipost May 08 '08, 10:03 AM

Check out the short sale forum at:

http://forums.biggerpockets.com/viewforum.php?f=103

Edited: 06/26/2010 at 05:10AM

Mike Seluk

· Fort Myers, Florida

59 posts
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Icon_minipost May 09 '08, 06:45 AM

I guess I don't see why the bank would be flexible on getting shorted 6k. That's not *that* bad compared to some of the ugly stuff that's going on, so why wouldn't they expect to get the full amount back, even if it means having to pay up after the house is gone and sold?

Edited: 06/26/2010 at 05:10AM

Minna Reid

Real Estate Consultant · Tolland, Connecticut

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Icon_minipost May 11 '08, 03:42 AM

Because the bank can't get the money back. The owner cant pay the mortgage, the house wont sell for the amount owed plus closing costs, and foreclosure is very expensive for the bank. A lot of times the bank would rather just sell short because their loss is actually mimized this way.

Edited: 06/26/2010 at 05:11AM

Mike Seluk

· Fort Myers, Florida

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Icon_minipost May 11 '08, 09:01 AM

I guess I'm just not used to seeing 'genuine' desperation. Too many people around where I am are just giving up.

Do you think they'd consider a deed in lieu of foreclosure because the amount owed is close to market value?

Edited: 06/26/2010 at 05:11AM

Minna Reid

Real Estate Consultant · Tolland, Connecticut

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Icon_minipost May 11 '08, 05:04 PM

Maybe - but that doesn't help the buyer.

Edited: 06/26/2010 at 05:11AM

Kathleen Couch

Real Estate Investor · Kennesaw, GA

23 posts
48 Influence

Icon_minipost May 11 '08, 07:50 PM

Minna,
Saw your post last night, but had trouble getting in the forum to post for some reason. I can help you with this. I will add you as a friend, so you can contact me off forum.
Kathleen

Edited: 06/26/2010 at 05:11AM

Eric Ames

Real Estate Investor · Redmond, WA

11 posts

Icon_minipost May 12 '08, 02:28 AM

I've done short sales in the past and I don't bother with them anymore. In my experience I've found them to be more work then they are worth. You would think that if the bank stands to lose more via a full foreclosure than a short sale deal you are proposing they would jump at the opportunity, however, that isn't necessarily the case. Most banks get a number in their head and they don't budge, even if you show them piece after piece of evidence that their valuation isn't realistic. Then even if you can convince them to finally come to reality you still have to deal with short time frames, that they rarely will extend, in addition to other hassles. All in all it is way too much work, you can find better deals and save yourself the added effort and frustration. I'm not saying that you can't ever find short sale deals, but unless you've got experience, connections or are able to buy in bulk you are going to spend a lot of time chasing pennies.

If you are trying to buy a property for $72K when it is really worth $78K, I'm pretty confident you can do better anyway.

Edited: 06/26/2010 at 05:11AM

Kathleen Couch

Real Estate Investor · Kennesaw, GA

23 posts
48 Influence

Icon_minipost May 13 '08, 04:57 AM

I just closed on a short sale a few weeks ago. It was one without any repairs. It was reduced from $155,000 to $121,000. If you need help let me know.

Edited: 06/26/2010 at 05:11AM

Jason Hanson

Real Estate Coach · Oakton, Virginia

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Icon_minipost May 15 '08, 07:23 PM

I have done dozens of short sales in the past and I would not do one now if someone put a gun to my head.

They are a waste of time for the serious investor who should not be sitting on the phone for hours trying to negotiate with the bank. I would stick with the deals that you know 99% are going to close and send your short sales to another investor and work out a deal between you and them.

Edited: 06/26/2010 at 05:12AM