OfflineOk, I've prepared an in depth analysis of a shell that happens to be a short sale. Its approved for 600K; however, at that price, anyone that buys it would do a WHOLE lot of work with no profit at all. Can an offer on an approved short sale be made below the approved price, and if so, is there even a chance, with a good argument made as to why that sales price, that it could sell for that lower price? Has anyone had any success getting an approved short sale for less than it was approved for?
This house will never sell, unless some investor doesn't do his homework and complete due diligence on it, and get good estimates on all that needs to be done to it, include hardscaping and landscaping, at the approved short sale price. To gain a 10% profit, I was going to go in with an offer at $461K with a short sale negotiator. Its a SFR in a high end area.
Thoughts? Advice? Any would be appreciated.
We have never had an offer accepted for less than the approved amount. In
fact we have had full priced offers be rejected or not even responded to after
3 to 6 months of waiting. We just don't have the patience for short sales.
BTW, depending on how you're putting the deal together, I don't know if the "risk reward ratio" of 10% return is enough for that larger type of investment. We'd rather make 20% to 25% return on cheaper properties, this way
if there's a glitch & you get stuck holding it for awhile it's not a big deal.
I took 10% of the price to sell it at. Its value completed is 1.2M (very low end of comps). I've accounted for a year of holding costs in my profits as well (although houses are selling amazingly fast in this area at that price range!) and 30K + 1% of costs in case of any problems arising.
Have you ever used a short sale negotiator when you put in short sale offers?
But, I do hear you on the lower end homes. I'm working on those as well, but this is one that will be VERY challenging, and I'm up for the challenge!
does short sale negotiations in CA. Just be aware that less than 10% of short sales get accepted. The banks have zero incentive to accept them. They make more money letting the house go into foreclosure. Once the bank takes back the house they no longer have a debt on their books, but an asset. In addition, they can now take this asset and borrow 3 1/2 times the amount of the house's value from our "lovely" goverment. This is why we have so much shadow inventory.
KimmyJ
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www.tagteampropertiesllc.com
Hi Tammy,
I want to encourage you to ABSOLUTELY sumbit an offer less than the approved short sale offer. What do you have to lose?
Although I agree with my fellow DG'rs that the banks don't have much incentive to accept short sale offers, I HAVE had offers excepted by the bank for less than the "approved" short sale price. It DOES happen in some cases.................
My latest example: I had an approved short sale offer at 525K in Southern California. The buyer fell out and we submited a new "cash" offer of 480k and the bank accepted. So, it does happen.
Let me know if I can help, I am a Ca. licensed realtor and Jeremiah 29:11 is one of my favorites.
Yes, I've been able to submit a lower price on an approved short sale and the bank did accept it.
I was using a realtor and she submitted the offer along with more recent comps and for sale properties showing the market prices had decreased.
After a lot of back and forth, the bank sent out an appraiser and the lower priced short sale was approved! Took about 6 months though to make it all happen.
Good luck!
Tom
Tammy,
Offer less for sure. If it's preapproved, then it was approved for a different buyer previously. Different buyer, different ballgame.
I don't completely agree with the banks having no incentive to do a short sale. On average, banks lose $58,000 on every home that goes into foreclosure. They then have added expense with maintaining, clean out, marketing, etc. Though the property may be taken back, and I'm sure they might be able to borrow against it, it is considered to be non-performing. They can only carry so much at any given time and then have to unload them.
Kyle
I don't know about that, after watching this video, it seems like the taxpayers give them an awful lot of money for shortsales, and they make a bundle, at least IndyMac!
http://www.youtube.com/user/fiercefreeleancer#p/a/u/0/ssl5yb7FewA
But, the worst that can happen is they reject my offer. So, I'm preparing it and all the backing documentation to present it. Now, if the realtor that's listed it refuses to give my offer to the bank (which happens all the time out here) I'm back to where I was with the other short sale I was pursuing.
I want to thank you for your contributions to the thread as well. I didn't mean to only thank Kyle, it was an oversight on my part. I'm still waiting to hear any news; that usually means the offer A. wasn't submitted or B. they aren't entertaining it. I gave them a cutoff date. That's over Wednesday, so we shall see!
Banks loose money if a short sale is not purchased during the foreclosure process. If the property does not sell and is taken back by the bank as an REO,the bank loose money because they have to hold this property on their books for twice the asking cost for insurance and maintance on the property until sold. the more defalt assest the bank has in its book,the less they can barrow from the larger banks.Go with a lowball offer,all they can say is no,but if they really want to move this bad asset they may say yes.Good luck.
whurndon
if the realtor does not present the offer and you can prove it, i would definitely report them to the state association, local association and NAR, if they are an actual realtor, not just a real estate agent. they have to present all offers, by law, whether they agree or not to the offer. NAR also holds them to a higher standard and it is a high code of ethics, etc. you could also try going through their principle broker, if you feel the offer was not submitted. find out if there is a way to have proof the bank got the offer, like they check off a spot they accept, reject, etc. and have it signed. just a thought....
Linda, Army EOD Mom
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IT'S ALL GOOD AND EVERYTHING IS WORKING OUT PERFECTLY FOR ME!
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The banks are making hand over fist with these foreclosures. How do you think they were able to pay back the government after a year and start giving their executives bonuses! I think I stated it before, it is in the bank's best interest to let the home foreclose and go to auction. Once the bank gets the house back it is no longer a liability, but an asset. The bank can borrow 3 and 1/2 times the FMV from the fedral reserve. I just went to an REO seminar presented by an REO broker and a former Chase Bank asset manager who now has his own short sale company. What they shared was amazing and upsetting. Nothing has happened to the banks. We bailed them out. In addition, they get money for "trying" to do loan mods. They get money for "trying" to do a short sale. They get money for having to take back a foreclosure. Then they get more money from their PMI company. And finally, they get money again when they borrow against the house from the federal reserve. Guess what? We Americans paid for it. We even gave the two biggest causing CEOs 25 and 30 million each to leave their jobs at Fannie and Freddie. And as a society we didn't even complain to our government. We just said "Those horrible banks." Don't let the news media sway you into thinking that the banks are hurting. They're not. Oh yeah, some of the big banks don't feel that agents are serving their best interest and after November are going to start they're own realty companies to move the inventory they do have for sale. Now after all that said, I wouldn't pay a MAO higher than 70% minus repairs and that's pushing it. You can never lose on a deal if you stay at 65%.