from Newport, Rhode Island
I just sent paperwork into the bank this week to get approved for a short sale on my house in Montana. I have had renters in the house for 2 years and they are very interested in buying the house. When should I notify the bank that I have renters that want to purchase the house- immediately or wait until the bank contacts me about the house? I'm just not clear what the best decision is here and I want it to go as smoothly as possible. There is no arm's length conflict as far as I am aware.
Thanks so much for any help!
Foreclosure Specialist from Miami, Florida
If you have been notified of foreclosure action by your lender, then you should submit the offer immediately. This is a very slow process and so acting fast helps.
If you have not received any notices from the lender (i.e. have not missed any payments) and the offer is equal to or greater than the loan balance, you do not need to contact your lender. You can sell the property directly. Use a title agency and they will make sure your lender gets paid off at the closing.
from Newport, Rhode Island
THanks for your reply, Simon. We are currently underwater on the mortgage by about 30K and need to sell the property. We do have renters in the home, but the rent does not come close to covering the mortgage and we currently are losing about $850/month. We are not behind on the payments. Our renters are interested in purchasing the property and I have filed paperwork with my mortgage company to get approved for a short sale. THe renters have not made an offer. My question is when should I notify my mortgage company that I have an interested party to buy the house? Should they know right away, later in the process, never? I don't know when to let them know that the tenants want to purchase the house. Thanks!
SFR Investor from Phoenix, Arizona
Most lenders want the property listed on MLS with a realtor - when you get an offer, you start the process.
Unless you're trying for a "Pre-approved" short-sale, where the bank sets the price..
What is your lender telling you to do?
Investor from Cincinnati, Ohio
Assuming your loan is HAFA-eligible, or otherwise eligible for getting pre-approval on a sales price, the most important thing will be to try to get the BPO to come in at a low enough number to entice/enable your renters to buy it. If it's a drive-by BPO, this may be impossible. It it's an interior BPO, then you will get notification and have some opportunity to intercede with the BPO agent with your list of low comps or other supporting information of the "negatives" with the house and neighborhood, to nicely encourage them to come in with a lower number.
Most times, the listing agent would play this role of trying to intercede with the BPO agent, and since you live out of the area it may be worth it to use a savvy local short sale agent. Plus, if the BPO comes in too high, the SS agent knows how to most effectively appeal the amount. You can call a large realty office and ask for their most experienced short sale agent. Your renter would put in an immediate bid to "pend" the property when it's listed. Your renter will need to be pre-approved by a lender as well, prior to them even submitting the offer.