Texas - Potential first short sale ? Is this a deal?

Question

3/2/2 in nice neighborhood.
Owner wants to sell fast and move, not keep the property
Owner is only 30 days behind and owes about 135K, including taxes
county appraisal is about 145K or so
comps in area run about 155K (need more comps however)
owner has indicated he intends to file chap 7

My analysis:
since owner needs to move, loan mod is not an option
not enough equity for a wholesale deal
short sale might be workable in a few more weeks when owners is 60 days behind.  
My offer price to the bank would be around 118K, depending on the BPO

If owners does file chap 7 before being 60 days behind, then that puts off a short sale until the owner comes out of bankruptcy doesn't it?  So then, how would I then get an opportunity to do a short sale via the owner, before the bank gets it?  Or maybe just let the bank take it, then make an offer to the bank.  However, then we are just simply taking about buying REO and Im sure there are deals out there, but its my opinion that the best deals are had when dealing direct with the home owners and not with banks and REO's.

comments and opinions welcomed please.

Nick J. · Answer

have you verified that? remember sellers lie

that doesn't mean anything. I only use that to help with lowering or justifying my low offer price, outside of that I don't think it represents anything close to it's value.

instead of seeing what's being sold retail, check to see what's been foreclosing in the immediate area and I'll bet you that you'll find that the comps don't come near that amount.

not good for you.

not true, you can short a mortgage that is current.The whole 'it must be delinquent to short sale is preached by amateurs fresh from a weekend seminar

why so high? what formula are you using to calculate that price

If the seller files BK, you can still work the short sale but you can't buy/sell it until it's been discharged. Typically I say it's not worth your time, especially your numbers b/c I have no idea where you think you'll make money on the deal.

Find out if the seller is filing BK b/c of the house and see if you shorted the house would that keep him from BK, if so then go ahead with it, if not, walk.

Nick J. · Answer

how about instead of asking him some more questions, you put a contract in front of him and tell him to sign here, here and here.

Also, keep this rule of thumb in your head- 10%

I don't want to start a whole new 'rule' but really it's best to assume your cost of doing business is going to be 10% of your sales price, in this case it would be $13,800 IF and only IF you sell it for 138k which would bring you down to $124,200 so anything below that amount would what you consider profit and you're saying you're going to offer 118k?

see what I mean, not so attractive is it?

I'll let others chime in as to what you 'should' be offering blah blah blah, just know whatever formula you're using now I would forget about it and tell the person who told you that to pound sand LOL!! j/k

Also, whether you use an option or get the deed it doesn't matter, you still need to get a buyer and do a 'double close' It doesn't matter if you use an option or not.

I'm not sure I want to go into how I have and want my comps done b/c it would be waaaaaaaaaay to long for a single post but I would make sure you could even sell it at 138k if you were to get an approval.

for me, if 138k was the retail comps I would be offering 69k minus repairs to the bank, obviously no where near your 118k

Account Closed · Answer

motiv8ted - I will be contacting the owner again to ask them a few more things.  Either way, I would plan on putting the contract in place with an option (so I can find a buyer).  I do need to do some more DD on the comps.  However, here are some numbers Im using so far.

selling price	        138000
listing fee (3%)	        -4140
purchase price	        -105000
closing costs B-C	-2100
closing cost A-B	-1380
A-B funding (2%)	-2760 (transactional lender)
=====================
net	                        22,620