OfflineHello all,
My name is Laura Monroy. And this would be my first forum post. I am new to real estate investing and have not yet done my first real estate investment.
I would like to get started, however.
Ok, here it goes. My sister wants to sell her beautiful custom-built estate, 5bd, 5.5bths, close to 20K lot size, in the upscale city of Woodland Hills, CA, (20 minutes from Downtown L.A.,and Hollywood, 15 minutes from the rich and famous Malibu beach) going for 1.4M. Similar homes are being sold/listed at 1.7 to 1.9M. Investor and buyer would be walking right into 300K-500K in this down market!
As you all can see it is a great investment, but most importantly helping my sister is really a motivating factor for me.
My sister has a 1st for $700K and a 2nd for $200K. Now I am assuming that both liens will get paid, but I am getting different versions on the topic and I thought I would get you guys involved, since I know some of you have been doing this for a while now.
Any help?
Thanks!
Laura Monroy.
maybe not any help but i wanted to say you are a great sister to do this for her
your sister can find out from her lender(s) what the payoff amounts would be for both of her loans.
"I will NOT BE BROKE! ANYMORE!"
In the name of Allah, the Beneficent,
the Merciful.
22.He is Allah besides Whom there is no God: The Knower of the unseen and the seen; He is the Beneficent, the Merciful.
23. He is Allah besides Whom there is no God: the King, the Holy, the Author of Peace,the Granter of Security, Guardian over all, the Mighty, the Supreme, the Possessor of greatness. Glory be to Allah from that which they set up (with Him)!
24. He is Allah: the Creator, the Maker, the Fashioner: His are the most beautiful names. Whatever is in the heavens and the earth declares His glory: and He is the Mighty, the Wise.
Thank you. But I am really confuse about the 1st and 2nd lien. I think both of the liens get paid.
The payoff amounts are the 1st at $700K and the 2nd at $200K. But what is the process on a short sale? I am assuming both of them get paid off, correct?
When the property sells, all the paperwork and money are handled by the title or escrow company. They would take the funds from the buyer and disburse them to the first and second lien holders, pay any other expenses as agreed to in the contract for purchase and sale and whatever is left over would go back to the seller/former owner.
You won't be doing a "short sale" unless you are asking the lenders to take less that they are owed on the property.
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Lenders will only do a short sale when you've missed payments. You would have to submit a short sale package and letter explaining your sisters circumstances of why she couldn't continue to fulfill the obligations of the loan. Lender(s) would have to agree to taking less than what is owed to them.
"I will NOT BE BROKE! ANYMORE!"
In the name of Allah, the Beneficent,
the Merciful.
22.He is Allah besides Whom there is no God: The Knower of the unseen and the seen; He is the Beneficent, the Merciful.
23. He is Allah besides Whom there is no God: the King, the Holy, the Author of Peace,the Granter of Security, Guardian over all, the Mighty, the Supreme, the Possessor of greatness. Glory be to Allah from that which they set up (with Him)!
24. He is Allah: the Creator, the Maker, the Fashioner: His are the most beautiful names. Whatever is in the heavens and the earth declares His glory: and He is the Mighty, the Wise.
The bank will never go for a short sale. There is too much equity in the house. Based on your figures the house is at 52% of FMV. There is too much of an advantage for them to foreclose. Is your sister behind on payments? My suggestion is that you do a straight option on the house and then market the heck out of the property. What you're going to do is tell your sister that you want to option the house for 1 mil. That will allow her to pay off her debt and walk away with approximately 90k after closing fees. You are not going to pay her anything upfront. You're option should be for at least 60 days. You are going to do an auction style sale. You place ads in the paper a for 10 days before the weekend of the auction. You place ads all over CL, backpage, etc. You send flyers to agents telling them they get a flat $25k commission if they bring a buyer. You pay the $300 for a flat fee mls listing. You advertise the house as a "public sale" and list the house at 75% of FMV. That would be $1,275,000. You hold a "public showing" on a Saturday and Sunday during 12 noon to 5PM. Let everyone place a bid on the house. On Sunday night, you call the highest bidder and ask them if they want to raise their bid. Then you call all the other bidders and ask them if they want to raise their bid. Once you get the highest bid, you call the person back and tell them they won the auction. You will easily make $300k on this deal if done right. If you don't feel good about making that much money on the house from your sister then tell her you split the profits 50/50 minus your advertising cost. Remember this is an option, so if you can't perform, you are not stuck with the house. Hope this helps...
KimmyJ
Press on...
Lenders will only go for a short sale when similar properties' values have drop around the property you're trying to sell.
"I will NOT BE BROKE! ANYMORE!"
In the name of Allah, the Beneficent,
the Merciful.
22.He is Allah besides Whom there is no God: The Knower of the unseen and the seen; He is the Beneficent, the Merciful.
23. He is Allah besides Whom there is no God: the King, the Holy, the Author of Peace,the Granter of Security, Guardian over all, the Mighty, the Supreme, the Possessor of greatness. Glory be to Allah from that which they set up (with Him)!
24. He is Allah: the Creator, the Maker, the Fashioner: His are the most beautiful names. Whatever is in the heavens and the earth declares His glory: and He is the Mighty, the Wise.
Thank you for your feedback. We are in the process of doing a short sale through other interested investor in the property.
Hi - we are in the process of getting the lenders to agree on the short sale. With late paytments on records and since it will be almost impossible for my sister to continue making payments against the mortgage and it will benefit the lenders if the property goes on a short sale, I doubt the lenders will not accept the short sale. Thank you for your feeback.
Wow, Kimmy - this is another great strategy. We are really hoping they will accept the short sale as my sister is behind payments and she can't afford the house any more. The lenders will get paid the full lien amounts or my sister's attack is to file brankcruptcy as this will be a negative factor on the lenders and they would beneficiate more by accepting full payment on the amount owed to them. We are running out of time so our objective right now is to postpone the trustee's sale date on early November giving us more strategic time to use other strategy. Kimmy thank you your strategy is a favorable one and if we manage to postpose the sale in early November I will consider to use your strategy.
Laura.
Unfortunately this is a property that even in a down market its value is up the roof. Thank you for your feedback. Laura.
That's great news! If you don't mind asking the other investor if they (he or she) would come on to DG and share the details of the short sale (providing your sister doesn't mind) and/or how they actually do the short sale (what's all involved with the process) with the lender?
"I will NOT BE BROKE! ANYMORE!"
In the name of Allah, the Beneficent,
the Merciful.
22.He is Allah besides Whom there is no God: The Knower of the unseen and the seen; He is the Beneficent, the Merciful.
23. He is Allah besides Whom there is no God: the King, the Holy, the Author of Peace,the Granter of Security, Guardian over all, the Mighty, the Supreme, the Possessor of greatness. Glory be to Allah from that which they set up (with Him)!
24. He is Allah: the Creator, the Maker, the Fashioner: His are the most beautiful names. Whatever is in the heavens and the earth declares His glory: and He is the Mighty, the Wise.
Did you find out if the bank is willing to negotiate and accept your short sale? If not I might be able to help you out. Let me know and good luck!
KimmyJ
Press on...
KimmyJ@TagTeamPropertiesLLC.com
www.meetup.com/cvreiclub
KimmyJ gave some great advise. If you start right now you could still do the auction by the first part of November. The whole process is explained in Chapter 11 - "Sell That House in 7 Days" of Dean's book PFRERN. You can still pursue trying to negotiate the short sale with the bank as well. Selling the property would definitely be better than the short sale because the short sale would show as a negative on your sisters credit. Also negotiating a short sale with the bank can take months to complete. Considering the amount of equity in the property I would think that a quick sale would be very possible. If it were me I would definitely give the auction strategy a shot.
Bruce
"Success is overcoming obstacles on the way to achieving your dreams"
- Karl Mecklenburg(former linebacker for the Denver Broncos)