Hello All. I could really use some help here. There's a FSBO house that I'm interested in buying as my primary residence. The home owner can't keep up with payments and has left me voicemail saying that the lender/bank is willing to do a short sale.
Thing is....the home owner has no real estate agent. I have no real estate agent either. Is this a bad idea or can we march on ahead ,as long as we have a real estate attorney reviewing all the paperwork?
I'm new to this. Any help will be most appreciated!
The long answer is that it might be much more difficult if no one knows what they are doing. In addition, the banks are sometimes alarmed when no agent is involved as they want to make sure that the property is marketed sufficiently to get the "true market value".
the bank won't be willing to talk to you without a release signed by the borrower for you to speak on the borrower's behalf. The release should include the property address, borrower's social security number, and loan number.
Without this, the bank will not want to talk to you.
Yes, thanks. According to the seller, he has "everything lined up". I'm going to see the property this coming weekend and that's when I'll discuss where the seller is, in the short sale process. I can already feel that I have plenty of work cut out for me in the coming weeks, if this opportunity is worth pursuing (which I think it definitely is). "Market" price for the house is 700k. I'm going to try to get it for 550k.
If he does not have an offer, then I can guarantee that he has not gotten very far with the lender...unless it is a local bank.
Let's take a giant step back-wards. What is the rationale as to why $550K is a good buy?
Can you define "market" price?
Is that what other people are asking for similar properties?
Well, it's a small development. One house got sold in July 08 for 700k. Another got sold in June 08 for 600k but it is a smaller house on a smaller lot. I saw two other houses that are on the market, listed for 700-720k. If 550k is not a great price, it is definitely a good price.
Overall, you're right that the home owner is largely clueless. This is going to be very tough to close. I'll learn a lot more on Saturday when I go to see the house and meet with the owner.
oh, I also found out the HO has been arrested a few times. disorderly conduct, resisting arrest, drunk driving. So, not only do I have to deal with the immense uncertainty of a short sale coming to fruition, I also have to deal with a seller who has personality problems :) I called him around 6pm on a weekday and he was definitely tanked. Not a good sign.
I'm not trying to be a buzz-kill, but I do short sales all day, every day. I urge you to be careful about your valuation. Just because it's cheaper than comparable stuff, does not mean that it is a good buy...never mind a great buy.
I'm not trying to be a buzz-kill, but I do short sales all day, every day. I urge you to be careful about your valuation. Just because it's cheaper than comparable stuff, does not mean that it is a good buy...never mind a great buy.
I'm in a suburb of Philadelphia PA. Not sure I understand what you're trying to convey. If the house next to it sold for 700k five months ago and I can get it for 550k, how's that not a good deal, apples-to-apples?
I just closed on a SS two days ago for my clients... After having gone through it I can definitely say it can be done without an agent. You simply have to follow the procedures as set forth by the lender (seller).
Yes, you will need to know what to accurately offer. I would engage with a Realtor simply as a mean to determine what the market is doing for closed properties and active homes that match the criteria of the home you're trying to buy. If you prefer not to do that, you could order a "drive by" appraisal from a local appraiser.
Ultimately it's all up to the bank to accept or deny the offer. Typically they'll order a BPO or a full appraisal.
If there is no real estate agency used in the transaction suggest that you hire a Real Estate Attorney to process through with the lender. They will work for you and no one else, always good to have protection or it could cost you $$$$. Would also suggest a full home imspection as the fee is well worth it. Not saying there is anything wrong with this home your considering but even new homes have been know to have problems. Have the attorney draw up the RE Contract, he/she should know what to draft that will protect you. I have practiced as a real estate agent since 1977 and believe me you should always have qualified representation (i.e. Attorney), there is just too much to know when it comes to purchase real property.
Thanks Tony. I'm definitely going to hire an attorney and get a home inspection done. I don't plan to skimp on things that, like you said, can put me at substantial risk.
I'm in a suburb of Philadelphia PA. Not sure I understand what you're trying to convey. If the house next to it sold for 700k five months ago and I can get it for 550k, how's that not a good deal, apples-to-apples?
A lot has changed in 5 months.
What would that similar house have sold for in 2001?
I'm not trying to convince you of anything except that "what something sold for five months ago" has nothing to do with anything.
I sense that I may be agitating to some, but I constantly witness people (on this very forum) talk about "how" to do a deal when they should be talking about "should they" do a deal.
What would that similar house have sold for in 2001?
So you're saying homes are going NOW at 2001 prices? Perhaps where you live but definitely not around here. There are several properties that have sold for 550k+ in the past month that sold for 200k in 2001.
Appraisals and BPOs are never expressed in terms of what sold five months ago. There's a reason for that: the market changes very rapidly. That's simply what Dave is trying to convey and I 100% agree. You should not base the price you pay for this SS upon the sale price of a home from five months ago. 30 day old comparables are desired. If you can find nothing within 30 days, then look back 60 days, tops. That's where a Realtor or appraiser would be able to assist you.
In an article posted on BP:
http://www.biggerpockets.com/articles/99-9-key-s-to-short-sale-success
The author says that the buyer needs to come up with CASH at closing. I was planning on putting 40% down and getting a mortgage for the rest. Can't I do that?
Da Deep, You may be able to purchase with 40% down but no one here can answer your question as there are a number of other things that are taken into account for a mortgage. Only the lender your working with can tell if they will loan to you with 40% down with other criteria provide to them. There are no long NO DOC loans out there to be found.
In an article posted on BP: http://www.biggerpockets.com/articles/99-9-key-s-to-short-sale-success
The author says that the buyer needs to come up with CASH at closing. I was planning on putting 40% down and getting a mortgage for the rest. Can't I do that?
The bank does not care about the LTV on your new loan. They couldn't really care less.
All cash Vs. 100% financing makes no difference to them.
Da Deep, You may be able to purchase with 40% down but no one here can answer your question as there are a number of other things that are taken into account for a mortgage.
All I'm trying to ascertain is: Does a short sale *mandate* that a buyer come up with all cash for the amount acceptable to the bank? That's what the article seemed to suggest.
I have a credit score approaching 800 and everything else makes me an excellent candidate to get a mortgage but all that is useless if a short sale deal requires all cash.
All I'm trying to ascertain is: Does a short sale *mandate* that a buyer come up with all cash for the amount acceptable to the bank?
No. The seller's bank doesn't care where the money came from. Of course, they'd like a cash offer because it's one less hurdle which may stop the deal, but it's not paramount. I consistently see short sale purchases which are closed with a new mortgage.
Thanks all, for clearing that up for me. Somebody needs to edit/delete the article http://www.biggerpockets.com/articles/99-9-key-s-to-short-sale-success :
"When you short sale only first mortgages you have to pay all cash"
If you really want a good buy on a short sale, then hang in there on this thread. I, along with several others, do this ALL the time. Just answer a few questions, and it will become readily apparent about whether you have a deal or not.
How many mortgages are on the subject property?
Who is the lien holder on the first?
What is the balance on the first?
Who is the lien holder on the second?
What is the balance on the second?
How long has the owner owned the property?
Did they receive 100% financing?
How many months behind on each mortgage is the seller?
How much did the most RECENT comparable sale sell for?
Most importantly, how badly does the seller want to conduct a short sale?