Probate/shortsale/foreclosure...all at one time!!!

11 Replies

Interesting situation: I have an offer in on a probate property. Property is in foreclosure. No equity in home and a special administrator has been assigned by court as the PR. Thus this deal would be a short sale. Administrator has told me he will submit my offer to lender if I pay his flat fee (5k) and include proof of cash funds, (home in unfinanceable). I have done so, along with providing contractors repair estimate on the home .

Now administrator is saying offer is too low and he will not submit. Considering this is a short sale and he is getting his flat fee in any case, why would he not allow the offer to go through and for the bank to negotiate with me if price is too low?

The estate will gain nothing by rejecting my offer, rather everyone will gain. Am I missing something here?

The whole point of a special administrator is to act quickly to preserve assets. The estate gains nothing by proceeding on this path. The decedent doesn't care about his/her credit... and there is nothing urgent about a short sale.

I'm more interested in how a $5k fee for doing nothing was obtained from you.

No, 5k is only if deal goes through. There is no equity in the estate, it is insolvent. Short sale is being allowed and encouraged by administrator because in many cases the short sale process can  be quicker than that of foreclosure. And given the fact is saves a home from sitting and rotting for years before bank re possesses and sells. 

Given that criteria, why would administrator not present "any" offer to the bank and allow negotiation to happen there? 

Originally posted by @Sean Dougherty :

No, 5k is only if deal goes through. There is no equity in the estate, it is insolvent. Short sale is being allowed and encouraged by administrator because in many cases the short sale process can  be quicker than that of foreclosure. And given the fact is saves a home from sitting and rotting for years before bank re possesses and sells. 

Given that criteria, why would administrator not present "any" offer to the bank and allow negotiation to happen there? 

 Totally guessing, but I think that your offer is low enough that the holder will get more out of foreclosing and reselling it than your offer.  They will lose $ either way, but by completing the foreclosure they will lose less.  He does not want to submit it and then tie it up, taking longer for them to foreclose and for him to have to wait longer to close the estate.  As far as probate goes, he is not getting anything much for this one so just wants it done so he can work on one that pays better.

I'd also love to know how the administrator is charging $5,000. What's the 5k for exactly? As far as not accepting the offer - my guess is that either the offer is so ridiculously low that the administrator feels its a waste of time and they can get more on the open market, or the lender has already has an appraisal that is very far from what you are offering.

In my experience with probates, any offer to purchase the property that requires court approval (like yours since the court is overseeing) must be above a certain threshold of the property's current as-is value (typically 75%).  Example:  If house is currently worth 100K then you must offer at least 75K (or whatever percentage the court requires) in order for the court to approve the sale.  The court administrator denying your "low-ball" offer may have nothing to do with the lender at all.

My suggestion is to ask the court administrator if that's the case and if so, what is their minimum percentage.  I'd also have a Realtor do a BPO for you, if you haven't already, and share the repair information with them.  I'd also submit your BPO with the short sale package because some lenders will use that, especially since them gaining entry for their own BPO would be difficult given the circumstances and the BPOs would likely be similar numbers. 

Good luck with your efforts!

Brokers Price Opinion which is when a Realtor provides an opinion of price and how they arrived at that number in a detailed report.  Let me know any other questions.

Update on this guy. Now administrator has put property on MLS. Three weeks and not a single offer. Asked if he would submit my offer now and he says "No, it is too low."

I kindly requested him to please inform me at what offer price would he be willing to submit to bank.

Feels silly to me to be negotiating with an attorney assigned to an insolvent estate on a shortsale before I even can even make an offer to the lender.