Whats your opionion?

Question

I have a lady who needs to sell her house.

ARV: $540k
Loan Amt: $591k
Mort Payment: $2400

Obviously, she is upside down. I was thinking she is going to need a short sale.

I would offer to buy around $327K (cash).

Now, she is wants $40k to take the house off her hands, that she will seller finance, and she will also pay the 1st years mortgage.

What do you think a good offer would consist of, if one even exist?

John Robertson · Answer

I'd agree with you guys.  Speak with her and explain that expecting a windfall out of this situation is absurd.  Be frank, don't be diplomatic about it.  Tell her what you can offer; banks will allow a certain amount of money for moving expenses (I think that's $2500 here in CA) and offer to pay for a credit repair program if the SS is successful.  Don't give her anything up front though.

Mitch Freed · Answer

Another way to get her some money is to purchase items from her after the sale of the home.  Just write up a bill of sale for things like tv's, furniture, etc...

Just make sure anything like this is done outside of closing...just to be safe.

Mitch Freed · Answer

Has an auction date been assigned yet?

The loan amount that you stated, $591 K, is that a first and second combo?

It sounds like a short sale is your best option if you really want to buy this home.  But like Rehab said, the bank will not allow her to receive any funds if they are taking a discount.  So, that being said, she needs to realize that if she can't sell the home on the market (according to your figures there is no way.) she either considers bankruptcy, foreclosure, or letting you negotiate with her lenders to take a discount and then you purchase the home well under market value.

I suppose, depending on the market, she could list the home with the realtor..set the asking price at less than what she owes the bank and advertise the fact that any offer will be subject to the banks approval.  But that would be only if she didn't want to work with an investor...and there probably aren't many realtors out there who would knowingly walk into that bear trap unless they are experienced short sale negotiators.

Any other thoughts?

Richard Warren · Answer

She is upside down, so you need to do a short sale.  The bank will not allow her to walk away with any money if they are taking a loss.  How in the world does she figure she can get 40k???  The house has no equity.  How can she seller finance???  There is no deal here.

8)

Dhane Crowley · Answer

Thanks Rehab702. Thats what I was thinking too. She is definitely out of her mind for asking for $40k up front.

Is there any other options that your would consider?