Fri, Jul 03, 2009
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Need Advice On 1st Short Sale |
DAVENY29
4 Posts
Member Since: 10/17/2008
Lynnwood, WA
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Posted: 20:19 on 10-17-2008
Hi Everyone, a lot of great advice on here.
Looking for some advice on how to handle this first shortsale I'm working one.
Here's the basics.
Owner's left the country because their Visa's Expired.
They will sign POA, or even put me or my partner on Title.
Partner is a RE Agent who has listing agreement to sell home.
1st lien is for $396k, and is only behind 1 payment. Value of home is $407k max. Also 1 years taxes have not been paid ... about $3800. House has no defects, needs no work.
Received Shortsale Packet from Lender. Going to try to get offer accepted for 70%, but realistically end up at around 75% as other foreclosures and shortsales have been selling at about 80% in this neighborhood this year, so say I can get it for $300k.
I don't want to buy the house to keep it. I have 13 houses now, all of which have mortgages.
Don't really want to pay 5% in points to get a hard money loan either. Have a buyer lined up to buy the house at $395-$400k.
Lender will not accept sales contract that reassigns another buyer.
I'm thinking that since owners don't care what happens, just go into title as the owner via QCD from owners, pay the 2% excise tax to the state. But will the lender deal with me on a short sale if I'm taking title to sell it? My partner is the agent, we partnerships and LLC's set up so we can act independently or together to take title.
Any advice is most appreciated. Thanks in advance.
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pierce263
14 Posts
Member Since: 05/28/2008
Woodbridge, VA
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Posted: 21:38 on 10-17-2008
A land trust might work for you. You and the current owner could form a land trust with this property. Then the trust can sell the home to this new owner dirrectly.
It doesn't sound like this property has enough equity in it for you to buy it outright and then resale it.
Really the easiest way would just be to have this buyer pay you a finders fee and then connect them and the seller directly.
Here in Northern Virginia short sales are a lot of hassle. Only about 20% of them go through. I don't understand the bank's thinking with these. They are being very difficult to work with. Perhaps they aren't watching the news.
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DAVENY29
4 Posts
Member Since: 10/17/2008
Lynnwood, WA
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Posted: 22:28 on 10-17-2008
Thanks for your reply. I'll check into the land trust and see how it may work here in WA.
I do think there is enough equity in the property to buy it and resell it. My partner will not charge the commissions if I buy it, so I'm looking at 100k equity before expenses. We already have the buyer, so assuming we sell for $395k, we're looking at paying excise tax of 2% twice, another 2% in title and escrow fees. So say 24k total expenses, that leaves us say 70k profit before taxes. Worse case scenario there's 44k profit by my calculations. House needs no repairs or maintenance, it's only 2.5 years old.
That's a bit more than 10% profit margin after all is said and done, and Uncle Sam takes his piece.
Am I missing something?
Washington seems to be the last stand for lenders doing shortsales. Especially on newer houses. I've seen them get as much as 90% on the typical $450,000 house here lately. Areas around Microsoft and Boeing still have high demand, it's the lack of lending options that are depressing things right now.
So a land trust with the current owners would help me avoid taking title, but how would I take profits over and above the short sale amount? Mortgage holder basically says that they want an offer in hand to negotiate short sale.
Thanks again for your info and help.
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cjmazur
4284 Posts
Member Since: 07/23/2003
Cupertino, CA
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Posted: 16:48 on 10-18-2008
1st lien is for $396k, and is only behind 1 payment. Value of home is $407k max.
Was there a typo? looks like 11K in equity.
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DAVENY29
4 Posts
Member Since: 10/17/2008
Lynnwood, WA
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Posted: 22:52 on 10-18-2008
No, there was no typo, I wouldn't have posted in the short sale thread if I wasn't trying to work on a short sale.
My post also said that I'm working on a short sale, relatively confident I can get the loan amount reduced to $300k. So, 400k - 300k = 100k equity before costs.
It costs about 9% to sell a house in WA using RE Agents and paying excise and closing costs.
So to sell the house outright, right now, there is no equity.
[ Edited by DAVENY29 on Date 10/18/2008 ]
[ Edited by DAVENY29 on Date 10/19/2008 ]
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rglover548
450 Posts
Member Since: 06/20/2005
New Orleans, LA
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Posted: 06:09 on 10-19-2008
You need a realtor, not short sale advice. I hate to be blunt, but you are incorrect on the belief that it will cost $30,000 to sell your home. The commission is negotiable and the buyer can pay some of those costs.
If the home is only worth 350k, then you have a short sale problem.
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TheShortSalePro
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Member Since: 01/29/2003
Oakhurst, NJ
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Posted: 11:02 on 10-19-2008
Don't count your chickens....
If you can resell the property to an informed buyer for $395,000 to $400,000 ... that is what the mortgagee will want.
It may agree to concede closing costs, unpaid tax bills, etc., but lenders/loan servicers are duty bound to maximize net recovery.... and lately, BPOs are equal to or greater than FMV.
Discount?
Not unless there are compelling reasons why the lender should accept your offer.
A few years ago (ancient history) lenders were more receptive to short sales. Now, they are fighting for every nickle.
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