Rental Property Investor · Marlton, NJ · Member since 2014 · 125 posts · 36 votes
In my limited experience, it seems that many banks value cash offers on REO properties. In other words, a bank will accept a cash offer that is at a lesser amount than a financed offer. I am curious in your experience, is the same true for short sales, or do banks value cash and financed offers equally? Any other words of wisdom for anyone who has successfully purchased a short sale w/ a cash offer?
Ive found on short sales and REO's that it matters less if the property is financed or all cash. To a retail seller it makes a small difference, but if the bid amounts are significantly different, then it wont matter if it is a cash offer.
A cash offer can offer a quicker close, but REO's generally offer 30 days to close even on cash. Same holds true on short sales. The only time cash really helps you, is when a home is not financeable because of condition.
I have facilitated a lot of short sales, and reo listings, representing the seller. Cash is not king, net is king.
I have had only a few occasions when an asset manager on an REO accepted a lower cash offer, over a higher conventionally financed offer. I suspected it was at the end of a quarter and sales needed to close for the AM to get a bonus. Rare occurrence when NET isn't the top priority.
FYI, I wanted to be sure to mention. Many government owned REO's offer a first look program because they actually prefer owner occupants over cash investors. Neighborhood revitalization.
Another question: if the house is destroyed and not financeable, can I use this to my advantage by coming to the table with a cash offer?
Please also see scenario below and advise. I have no clue how to best work with a bank in this scenario...
I met someone who has abandoned his house and mortgage. I have no idea how this slipped through the cracks and didn't foreclose...but it didn't. I've been dealing with Citi Bank, telling them the owner wants to give me the house, as he wants nothing to do with it. He owes $41k in remaining principal due and a total of $89,908 for all the past interest, unpaid taxes, etc. due. The house is all but falling over. It's not work even $25k. The bank got me started on paperwork to move through the process as a short sale. I wish we could settle, but this is what they say must happen. They are getting a BPO and assigning the short sale to an agent. They want me to work with them to help the seller fill out his paperwork, etc. One of the forms is a "Uniform Borrower Assistance Form". To fill this out in my advantage, what should I select for the "I want to" line item? The options are: a. Keep the property (no, owner wants nothing to do w/ it),
b. Vacate the property (owner has already done this, it's been abandoned for 5 + years)
c. Sell the property (he wants to walk away. so what's the difference between vacate and sell?)
d. Undecided
Owner just wants to get his name unattached from this house and move on, and I am trying to make it as painless as possible for him. From a bank's perspective, what would be the best option here? Remember, he owes $41k principal, $89k total balance, and the property is worth less than $35k.
The deal is basically between me an the bank, but I am assisting the homeowner. It's not a scenario where he can even really short sell it for $$, as it is so far gone. Am I making any sense here?
The answer on the form should be "sell". This is a typical short sale,mregardless of the amount outstanding. As long as there is no second Mtg/junior liens, it'll just depend on what BPO value they get. Make sure and submit repair estimates from a GC with the short sale package, before they do the BPO.
@Rachel Trimble They key in this situation is the bank is telling you they want an Agent handling the short sale. If the short sale will be handled by an Agent, that Agent is going to be required to submit the Uniform Borrower Assist Package and Seller financials. The Agent will be required to submit, even if you go through all of this trouble, so I think you are just wasting time in trying to deal with the bank directly. BTW the uniform borrower assistants form is used on government backed loans, so that tells me they are not going to consider an accepted short sale offer between you and the Seller without putting it on the open market(MLS with a licensed Agent). On government backed loans, for short sales, the bank wants proof that a home was active on the MLS for at least 7 days before the Seller has accepted an offer. The banks do this to reduce fraudulent and/or deceptive activities.
All owners just want to get their name unattached from the house and move on, but in order to do that, they have to go through the lengthy and involved process of completing a short sale.
Until the foreclosure, the Seller can select the Short Sale Agent. After a foreclosure, then the bank can select the REO Agent. The best way you can help the Seller short sale, is to help him locate an experienced short sale agent. However, putting it on the open market may mean you do not get the purchase, so you have to weigh whether it is worth your involvement. it sounds like you have already had the Seller sign an authorization. Call the bank and confirm what I am telling you above. The Seller is still the one that selects the offer that gets taken to the bank, but if they get other more attractive offers, he may accept those in order to give them the best chance of the offer getting short sale approval from the bank. The Agent is going to want the Seller to accept an offer that the bank is most likely to approve.
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