Short Sale

Make an offer to the bank with permission of owner and include a letter explaining the repairs needed.

You'll need a hardship letter from the owner explaining why they can't catch up the payments or continue to afford the home. Also a cost of the repairs, to justify the offer. The better prepared your package is the easier it will be to get a loss mitigation rep to work with you, this shows them you're serious, you know your stuff and not just some novice, otherwise they won't waste their time!

I just found out that the owner owe $320,000 and also he had an equity loan of close to $80,000 and don't forget it need at least 40,000 is this going to work or should i just find another deal.
plus am planning to assign the deal.

What would you guess is the value of the property?

I have a scenario like that right now that I am working on and here is what I am doing. I found a real estate agent familiar with short sales and am having her handle the short sale, as we speak. She is also submitting my offer with the short sale package. Like it was mentioned above you should have together the list of repairs that will help justify your offer.

Be sure to know going into the deal that you have run the numbers to be sure that there is a cushion of built in profit to be made on this deal. You don't want to get a property that has little to no profit because you will not be able to assign it to anyone and it will ultimately be a waste of your time and energy that you could have spent finding a deal with built in profit that makes the deal work for you and ultimately the investor. Typically investors don't go much above 70% loan to value so you need to be sure that your after repair value (ARV) puts you in a postion to make money through assignment of contract.

Don't forget in this market just because you can't do the deal doesn't mean you can't make any money. With this deal, because you found the borrower that needs to do a short sale, you could make money by referring the short sale to an experienced agent that could pay you up to 30% of the points they receive for the short sale from the bank. They can give you a referral on this. Let's say that the agent gets 5 points from the bank. 5% of say a $350,000 is $17,500 and your 30% of that would be $5,250. Not a bad referral check I would say. Don't turn these opportunities away because small amounts of money add up in the long run.

If this borrower ultimately wants to stay in the home and doesn't want to do a short sale you could be a good samaritan and send them to someone to do a loan modification for them. If they qualify the bank may lower their interest rate and in turn, their payments. You may be able to get a small referral on this as well, although not near as much as you would with the short sale.

remember this borrower have to loan secured buy the property one for $80,000 and another for $320,000 the hse is worth $120,000.

If property is worth only $120K and $400K is owed, you would need to get a contract for $84K or less to interest an investor. I don't think lenders are going to sign off on this. But you don't know until you ask.

Al

With that much of a difference between what is owned and what it is worth you will need to provide comps. that show the property value at $120