All Forum Posts by: Chinmay J.

Wayne is spot on. Short sales often times are not accepted by the bank or the approval is changed months down the road. They have a bottom number where they are going to make money on it (Time owned, payments made, is there PMI/FHA/USDA/VA backing) and if things don't hit that number they say no. They are not the "Fire Sales" they use to be.

If the bank is going to lose money and the loan has backing insurance (FHA/PMI etc) they just say no, why lose one cent when they are insured against loss. Let it foreclose and make their claim against the govt (they get to tack on all their extra fees). it is usually good to research when they bought the house and how much is left to pay, may help you find the right number. The process is generally that the owner and you agree to something, then it is presented to the bank. An "Approved short sale" means that someone else made an offer and the bank said "Yeah that works for us" but the buyer already left and found something else by the time they agreed. Now they are trying to find someone who will match the price the bank already agreed to.

Your guess that the bank is most likely in the dark is usually pretty close until the first offer gets accepted.

Great explanation. Thanks..

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Originally posted by @Wayne Brooks:

@Chinmay J. A cash purchase doesn't speed up the process at all, the lender just verifies the buyer has cash/pre approval to begin the review process. Offers don't get submitted to the lender, only fully executed contracts. I didn't assume you were the listing agent, but you and the listing agent need to know about any junior liens that may need for the buyer to kick in some extra money to satisfy them, up front, in order to structure your offer properly. Example: here, one of the biggest problems with a short sale can be back hoa dues, $10-20k. The bank will typically only pay 1% of the loan, or a max one year of dues out of their pocket to settle this, say $3000. The hoa demands $8000 to settle. The seller has no money, so the buyer needs to kick in $5000 in addition the purchase price, so the buyer needs to lower their max offer by that amount. Same thing with 2nd mtg.s, judgments, etc. You need to figure this out up front instead of 60-90 days later, when it's too late to lower your price.

Thanks for your quick response. I will pose the question about junior liens to the listing agent. Also good thing about this is that there is no HOA. This is a rural property, but you bring up a good point to keep in mind for future deals

Also, wouldn't judgements, liens, etc would put cloud on the title, and essentially nullify the contract if the seller can't provide with marketable title? Or does it work differently in case of Short Sales?

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@Russell Brazil - You are a great asset to this community, and I am glad you are part of the DMV and not some other geographic area 4000 some miles away. Hoping to meet you someday in person at one of the REIAs.

Congrats on 5K.

1 Vote

Originally posted by @Wayne Brooks:

The owner is just being smart, likely with the advice of an experienced agent. It would be impossible to close in two weeks, with a short sale. 90 days is a typical requirement to get Actual bank approval, thus the time period stated by the seller, and closing a few weeks after that.....SOP.

Also, you/the listing agent needs to know about any other junior liens that may need some contribution, other than what the first mtg. holder will offer, in order to properly structure the offer.....the most over looked step in successfully completing a short sale.

Also, there is no value in a seller taking his property off the market for 90 days for an offer they know the bank is highly likely to reject, hence the reason to negotiate a reasonable price up front.

Thanks for your insight...

I understand the typical short sale when a loan is involved, but since this is a cash sale, I thought that the bank approval would be much quicker in this case. So based on your explanation, I see that the offer has not even been presented to the bank. Here is a follow up question. Isn't the clock ticking for them. If they don't get it under contract, wouldn't they go in foreclosure? Its a lose-lose situation right? Bank loses and Seller loses.

To your second point. I am not the listing agent. I am the buyer and acting as selling (buyer's agent).

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I recently made an all cash offer (with the help of HML) no contingencies except Short Sale Contingency, and Well and Septic contingency for a house that was listed at $129,000. My offer was $90,000. I got a counter offer for $100,000. I plan to counter that as well with something around $95,000. The ARV will be around $160,000 with repairs of about $30,000 and holding costs of about $8,000

However, the seller pushed back the dates from next two weeks of closing to first week of May and Bank approval of second week of April. I understand that the bank is trying to get the best possible price for the house and is trying to buy some time. So with this background information, I have a two fold question:

What is the likelihood that seller is acting on his own and bank is completely in dark about this, or is the bank dictating what the dates should be on the contract, and seller is just obliging? (This question is so I know how to present myself. I never had to deal with Short Sales from the listing side)
What would you investors do in this case. Would you be OK waiting a couple of months for deal that seems to be pretty good, if I do end up getting bank approval?

This will be my first flip. So far I have been buy and hold investor and time was never of essence to me. I was willing to wait. I have my eyes set on the goal of 2 flips for 2017.

1 Vote

Originally posted by @Joe F.:

@Chinmay J. Not getting sold to the average homebuyer? What about for an investor? I believe there is somewhere here I can post the numbers and get feedback, I will find it tomorrow.

You can post the numbers right on this thread.

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@Russ Trimboli - I had asked this just a while ago. This was an interesting discussion and was very educational for me. Check it out.

Offers w/ Expiration Date

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@Manuel Rosa - Congrats Manuel. Pics and numbers look great. Just a couple of questions...

How did you fund it? Did you pay cash yourself or went to HML. Also how long did the process take with the bank with it being and REO. Did you pay the listing price or negotiated it down to make your numbers work.

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Originally posted by @Joe F.:

Originally posted by @Chinmay J.:

Originally posted by @Joe F.:

Thanks all. The house I was talking about is actually 2 houses on same property with one deed. I would live in one, rent the other. I'm looking for a house to live in so looking into house hacking to get me started in real estate investing. May go VA loan route for this one being that I will occupy one. Selling for $265000 so I'm going to look it over again and make an offer.

As for other houses I'm looking at i see some that are listed for hundreds of days. Only seeing them online and only pictures of them but makes me wonder why nobody wants them.

Is that two detached houses on one property under same deed or its a duplex?

It is 2 detached houses on one property one deed.

That is unusual and could be the reason why its not getting sold.

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All Forum Posts by: Chinmay J.

Chinmay J. has started 51 posts and replied 1181 times.

Post: Own 3 rentals but still novice at real estate investing!

Post: Short sales . How would you experienced flippes handle this?

Post: Short sales . How would you experienced flippes handle this?

Post: Russell Brazil's 5,000 Post

Post: Short sales . How would you experienced flippes handle this?

Post: Short sales . How would you experienced flippes handle this?

Post: Multiple offers but no one buys?

Post: making many offers a week

Post: NJ Flip: Before/After/Numbers

Post: Multiple offers but no one buys?