Short Sales in WA state

5 Replies

Originally posted by @Christopher Coleman :
Good Morning BP,

Does anyone have any valuable info or advice for flipping a house involved in a short-sale?

 Short sale implies more is owed than the house would sell for. How do you flip a house that is underwater? It has to have the bank's approval, why would they walk away from money?

@Christopher Coleman The only way I see you flipping a short sale is if the amount owed is underwater close to what the bank is asking, the property is also in really bad condition and the ARV is significantly higher. I would think a Wholesaler or someone scrubbing the late mortgage list would have found one by now, if not, the only way to make any money is if it falls into this area.

Example of this could be:

1) Property is really bad shape and currently valued at 100K, last update in 1975 and hard to sell turnkey

2) Loan balance is 125K and owner lost job and cant pay the mortgage (bank agrees to take something between 100k-125k)

3) ARV Comps in the area are at 250k

You're basically saying you're willing to give up some of your profit to the bank (the amount between loan balance and current market value) to make this deal happen. If you're in a really tight market it's possible but in a tight market Short Sales sell fast to Owner Occupants.

What's the ARV versus what the bank wants? What's your rehab cost? these numbers plus the bank spread will tell you if this is a deal or not. Also the bank will need to approve your offer price so projecting too far away from the ask will get you a no in the current sellers market.

Washington has very strict homeowner/foreclosure laws so be careful if/how you are marketing to homeowner and if you are providing certain services to them. As a buyer you need to understand what an arms length transaction is,that you will typically have a 30 day deed restriction and at times a 120 day deed restriction if selling for more than 120% of purchase price.