House is 3/2/2 in a high demand school district. Ive got it under contract and have started the owners doing short sale paperwork
needs minor repairs including fence and sprinkler system, carpet and paint.
Seller only owes $120K but has 3 leins, see below
comps vary by wide margin - 105K - 179K or more
only 2 or 3 foreclosures within 2 miles
tax lien of $9K
child support lien $3K
financial name lien (another bank) $5K
Real Estate Investor · Ocala, FL · Member since 2008 · 742 posts · 463 votes
17y
Here is my opinion:
1) Add $9K tax lien on side of seller to pay. Subtract this amount from the $ amount the lender will net. Also- get the property owner to attempt to file and get this lowered.
2)Add $3K child support lien on side of seller to pay. Subtract this amount from the $ amount the lender will net. Sorry- but do not try to get this lowered. IT IS OWED TO A CHILD!
3)Add $5K other lien on side of seller to pay. Subtract this amount from the $ amount the lender will net. You have to get this either wiped off or lowered. Offer this other bank $100 to release lien.
Residential Real Estate Agent · Palmdale, CA · Member since 2009 · 10 posts · 0 votes
17y
I can see how thhe liens are a big issue. That fact that you've already listed the property as a short sale, in addition to it needing paint and carpeting sounds to me like it won't sell at the higher price range.
In real estate we all do a lot of social work and solve other peole's financial problems, which you may have to do for this home owner. I would contact the child support agency and ask them if they will release the lien against the property for this sale because the owners will not be getting any proceeds anway.
Next I would try to work something out with the other bank. In addition, the home owner is not making payments on the property and they can use some of that money to pay off debt for the tax lien. I don't have an extensive education on liens, but I think the government can be pretty unforgiving and the tax liens can keep you from completing a successful short sale.
Real Estate Investor · Ocala, FL · Member since 2008 · 742 posts · 463 votes
17y
Here is my opinion:
1) Add $9K tax lien on side of seller to pay. Subtract this amount from the $ amount the lender will net. Also- get the property owner to attempt to file and get this lowered.
2)Add $3K child support lien on side of seller to pay. Subtract this amount from the $ amount the lender will net. Sorry- but do not try to get this lowered. IT IS OWED TO A CHILD!
3)Add $5K other lien on side of seller to pay. Subtract this amount from the $ amount the lender will net. You have to get this either wiped off or lowered. Offer this other bank $100 to release lien.
My exit strategy is a short sale flip. I think the house *should* sell quickly, if for no other reason than the high demand school nearby. When i heard the mortgage was BoA/countrywide, I cringed and almost didnt take on this property. However, I thought that if nothing else it would be a good learning experience.
comps vary quite a bit, from 105--179K
repairs somewhere around 7K
I think it should sell quick at 130-135K
"quick" being < 60 days
My first offer Im thinking is about 50K
There is a very similar home just around the corner that has been on the market since june (going on 120 days) priced near its county tax value, but it has new paint, tile however is a bit smaller.
Offer based on 65% of low comp minus tax lien. The other two liens I hope to get reduced a minimal figure.
Property Manager · Portland, OR · Member since 2008 · 212 posts · 14 votes
17y
The tax lien and the child support lien will be tough to negotiate...what kind of tax lien is it..property or income? Either way they follow the property so they really don't have any reason to sell short.
The 5k lien you can certainly work with.
Have you decided what price you will start with?
Bank of America actually isn't that bad to work with...they are more organized than the other lenders...at least that is the experience I have had with the shorts I've closed with them so far.
I'm hoping the $13,487 figure is a typo...if FMV is around 130k...a BPO will come in close to this..making adjustments down for the fact it is distressed and if it needs any work. The value has to be backed up by comps.
B of A has preliminary evaluators...if your offer fits in their range..they will order a BPO...but if it is something like 13k...cmon.
Real Estate Investor · Ocala, FL · Member since 2008 · 742 posts · 463 votes
17y
No Mitch, you are not reading a typo.
Very simple, the original poster was asking for assistance on how to start the short sale offers. So, I gave them the exact same thing I would do. To make a first offer around FMV would not be productive for any investor! (unless they had a business plan of complete failure.) But to make money, an investor has to buy at a below market price and then hopefully sell at a higher price.
As for making low offers. Once again, making a low offer will get the ball rolling just as it will by making a high offer. So, why not start low? I will repeat myself, NEVER has a lender refused outright to negotiate with us. They more often than not find these low offers funny, but who among us doesn't need some laughter in our daily lives. But the lender will continue to process the short sale.
Just a quick update. I finally got all the paperwork back from the seller and as soon as BofA gets me in their system, I will be working this short sale. Now I dont want to get too excited yet, I still have to find a buyer but also get more short sales line up to work.