I have been reading through some articles on this site. I'm currently looking for my first house to flip. I am just starting out and have a very low budget to make an offer. There is a house that I was interested in that was getting ready to go to short sale. This house was a total fixer upper, they were asking 20,000.00 and after speaking with the listing agent I was told that the guy that currently owns the house had a lien he was still paying on in the amount of 32000.00. The taxes were kept up until today i checked and 2014 taxes were not paid yet. My boyfriend and I were going to do the repairs ourselves. The home is in a nice neighborhood with a good school district. Also, every house around it is nice and well kept. The comparables are ranging from 40 to 60 thousand. I made an offer of 5000.00 cash on the home. The agent replied with a worksheet of the total cost of the purchase would be 8134.00. He also mentioned that the bank could possibly not accept my offer because of it being so low. Yet I seem to be the only person interested in this property. The home is in pretty bad condition(definitely not worth 20000.00). Do you think the listing agent is only trying to pull more money out of me? Also, do you think I have a chance to get this property if it goes into short sale or foreclosure? The listing agent also told me he would make sure the attorney working on the case would know about my offer.
Any advice or insight would be greatly welcomed.
I don't think that agent is trying anything.. Your offer is low... It happens, and the listing agent seems to know what the bank will take and not take(in most cases).. You could always try (not saying it is going to work) taking a contractor to the house have him right up a reasonable cost of repair and submit it with the offer.. Because banks don't see what state the house is in. They see the numbers... And if you go in with more info they may be willing to work with you a little more. That is my 2 cents worth! Good luck! keep up the work!! Keep me posted on how it goes!!
it is a start. What you have to know as a buyer of a short sale is the number you will go up to. What is the maximum you will pay for this home.. The bank will come back with a number as to whet they want. Then you have three options. 1 walk. 2 counter. 3 accept their price. Remember short sales could take up to a year to work through the system although some go quickly.
I would let the realtor that you can increase your offer once you know what the bank wants. The realtor will not want to deal with a lowball offer if you will not move from that position. I know as a salesperson I would not want to deal with a buyer unwilling to move in price.
lots of good points made above. Just a note about bank perspective: Mortgage servicer/ and loan investor know they have a note for 32k. You also pointed out that comps are 40-60k. You can make any offer you want to the realtor, but ultimately you have to convince the bank why they should accept 5k on a 32k loan when other houses supposedly sell for 40-60k in the area. That logic is hard to ignore. Yes you can submit repair estimates from contractors to support your case, but you'll have to submit a 55k repair estimate then to support your 5k proposal, which might still be a tough sell. Consider the realtor as a gatekeeper who will ultimately pass the offer to the bank for final approval. You can see why they don't want to waste their time submitting your offer... banks will only usually accept BPO value and maybe minus some reasonable non-cosmetic repairs based on my experience...
I appreciate all of the insight, this particular property would take a major overhall, huge wall caving in, in the garage, new roof, kitchen needs remodeled, bathroom needs remodeled, the entire yard needs redone, the whole house needs carpet, new walls in some rooms and paint, you could easily sink 50,000.00 into the home if you don't do your own work. Most likely the place will be abandoned if no one buys it.
You will need to submit contractor estimates (banks won't include cosmetic repairs) if you want to have a prayer with an offer substantially below the comp.s. The listing agent should Not tie up an owner's property with an offer they know won't be accepted. Depending on who owns the loan, the owner being current on payments may hinder the short sale. The bank will also consider the owner's over all financial condition, not just the house vs mortgage.
On a short sale you can't depend on the bank doing what common sense would tell you they would do. I've seen them have a contract in hand, it was above listing price, and they choose to foreclose on the house.
I'm in a situation now on a short sale that needs to have the pool removed. The city had told me to simply put holes in the bottom of the pool and cave it in,,,however the house is now vacant and a fence section fell down, now the city is involved in the house, the Environmental Department wants every bit of concrete removed when the pool is taken out (additional cost about $5k which I hadn't budgeted.
If I decide to walk away because of this, the house will go into foreclosure, the city has told me they will go in and have the pool removed (and I'm sure they willl end up spending a lot more than I would),,and put a lien against it.
Common sense would say they would come down a few thousand to help me with the cost they caused by taking over 2 months to give an approval,,but I doubt they will, the house will be vacant, the city will put a lien against it, and the bank will end up getting substancially less than they will if they sell to me, but thats probable what's going to happen (at the same time short sales can be super deals, if they work out)