Two loans on one property - Possible Foreclosure

[Frank S.]

Property in Illinois

200K listing

300K owned to Bank #1

40K owned to Bank #2

Bank #1 indicated court proceedings. Motion for a default withdrawn. Await motion for summary judgment ( will be responded)

Fastest Sheriff's sale: July, according to Owner's legal adviser.

Property has structural and cosmetic issues. The real market value may be $150K to $170K. ARV could be $350K.

How likely is Bank #1 approve a low offer of $150K, or will they pursue foreclose.

What about Bank #2?

It's sad to see this. I'll survey the property and will keep an eye to the auction sites in case they don't reach an agreement. If it goes to auction, at least I have seen it already. 

[Jennifer Kinzle]

@Frank S.  What banks are you dealing with? I've seen it go either way with the banks.  We've had deals summarily dismissed with a cash offer over appraisal.  We've had offers get approved that were below the typical 20% guideline.  I've not seen a bank care about structural issues, radon, mold, standing water, fire damage or anything else when it comes to comparing local comps, which many times compare apples to oranges.  When we list a damaged short sale, we've sometimes gone into round 3 on appraisals with the lenders, to fight for a decent one, as well as pull a verified list of repairs by a local contractor.  $150K on a $200K list price isn't impossible, if the listing agent is highly experienced on short sales, you've got a fair shot, but I'd expect a counter offer.