Real Estate Investor · Member since 2009 · 27 posts · 0 votes
I just spoke with a friend yesterday. She has decided to let her house go. She bought this 3 years ago at 100% financed for $230K so definitely under water. It is in Bremerton, WA which is much less value than Seattle area. I think it is worth about $160K????????
What should I do next if I want to wholesale this? Please help...step by step advice would be great. I will follow it to the T's. Thanks in advance.
If the property is under water, then she owes more than what it is worth. How has she decided to "let her house go"? It seems to me as though if she wanted to get out from under the mortgage, she would have to do a short sale. She would need to get in touch with her mortgage company and talk to an asset manager about whether or not they would consider doing a short sale. That would be the first step.
Supposing that a short sale is a possibility, you would then have to make an offer on the property and have it accepted. You would need to do a double close, and use transactional funding, because the bank will most likely not allow you to use a wholesale contract. They are going to look at you trying to take a cut of the money, and not allow it since there would be deficiency debt.
If the property is under water, then she owes more than what it is worth. How has she decided to "let her house go"? It seems to me as though if she wanted to get out from under the mortgage, she would have to do a short sale. She would need to get in touch with her mortgage company and talk to an asset manager about whether or not they would consider doing a short sale. That would be the first step.
Supposing that a short sale is a possibility, you would then have to make an offer on the property and have it accepted. You would need to do a double close, and use transactional funding, because the bank will most likely not allow you to use a wholesale contract. They are going to look at you trying to take a cut of the money, and not allow it since there would be deficiency debt.
You think its worth $160k, but you need to get a solid idea what your numbers are. Look at the comps in the area. Ideally have a realtor do it and don't depend on Zillow, which is frequently way off the mark. Find out the comp prices, and then plan on selling it at least $10k lower than the lowest comp. THEN if you want to make a profit spread, shoot for a price lower than that to get approved as a short sale. Shoot for at least a $10k spread. Once you have it under contract with the seller, you can start looking for a seller, while you are working to get the bank to approve it. Then when you have the approval and the new buyer in place, set up transactional funding.
Transactional funding is a one day loan that you use to pay off the bank in the short sale. When you sell/close it to the end buyer that same day, you pay back the one day loan and take the profit from what's left over.
I just spoke with a friend yesterday. She has decided to let her house go. She bought this 3 years ago at 100% financed for $230K so definitely under water. It is in Bremerton, WA which is much less value than Seattle area. I think it is worth about $160K????????
What should I do next if I want to wholesale this? Please help...step by step advice would be great. I will follow it to the T's. Thanks in advance.
No offense, but I think you should refer this to a short sale expert. You might get a referral fee. You're not sure what the property is worth and most investors don't tackle short sales on their first deals.
You need to learn everything you can from this site and others like it with regards to wholesaling and any other area of investing you may be interested in.
You have to walk, before you can sprint or run a marathon.
Find a realtor, get some comps (Preferably 3-6 month). You are at the hands of the bank. I'm not sure if the bank would be so eager to let it go for $160,000 however, if this is the actual value, you have very small profit margin for wholesaling this. However, this is a great time of the year to buy, especially in the cold north (The hype of the summer is gone).
Thanks for the reply. I will take Sharon and Eddie advise and have a realtor pull comp on this.
I would like to know any of you know of a good shortsale negotiator? In Washington would be a plus. I read from one of the member (Brian I believe) mentioned of a company that does it without taking upfront fee. I email him but the email got returned.
I know this deal will not net me much if any at all, but this will get my feet wet and provide excellent learning experience.