So here's the deal.... I was contacted by a gentlemen who's company purchased the Redemption Rights of a 3 bed/2.5 bath SFH from the original borrower this week. He's looking to find a buyer for the house with the fees they charge for attaining the Redemption rights included in purchase price. Purchase price to redeem + fees is $287,000 and he says ARV is $345,000. He just sent me the information this morning and I emailed in reply saying that the sale price isn't quite what we need to make it worth our while. If in fact ARV is $345,000, our MPO would be $241,500 less any repair costs. I assume these guys could care less what the bank actually sells at, as long as they get their little commission for purchasing the rights. What I want to know is, is the only way to get the price point down to negotiate a short-sale with the bank and the original borrower? Or maybe if I can find a buyer looking for a buy-&-hold then just settle with the bank at their price and hope I can make a spread? Thanks guys.
For redemption rights to have any value, there would have to be equity, therefore a short sale would be irrelevant.
@Wayne Brooks Excuse my lack of knowledge when it comes to shortsales..But how is it irrelevant? If a short sale were to take place for let's say at or below that $241,000 i'm looking for, IOT satisfy the 70% rule minus any repair costs and create a good enough spread for me to sell to a back-end-buyer, wouldn't that be the a desirable resolution? What am I missing here?
A lender will do a short sale when the Value of the house is Less than the outstanding balance. Banks Don't agree to short sales when there is equity, just so the buyer can make a profit. We don't have redemption rights here, so I could be mistaken, but there would be no reason for an investor to buy someone's redemption rights, if there is no equity. Redemption rights simply allow you to pay off the Entire Balance Due, after a forced sale.
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