Question:
Possible Short Sale Deal Advice Needed
If the owner has little or no equity then it is a possible candidate for a short sale.
What you offer the bank is dependent on a number of things. What are you going to do once you own it, sell it, rent it, or live in it? If you are going to resale it, what will it sell for?
2nd, what is your cost structure and profit requirement. Each investor has different answers to these questions.
You don't care what the bank will accept; only what you are willing to pay in order to make the amount of profit you want to make.
My humble answer:
As an investor you are certainly challenged when dealing with owners who have little or no equity.
You have NO choice; you need to create it somehow! I see no future in paying retail for real estate unless you are a user of it or you have information of forced appreciation.
If you do not know what you are going to do with the property after you own it, you need to figure that one out. You should have an exit plan and a profit plan.
That projection should be very clear and written down.
As for cost structure; as little as possible, preferably with money from your credit line, or better yet, just control the property until you can exit with cash.
Profit, well as much as possible, but it is OK to leave some juice on the table as long as you come out of the deal with some profit.
There is a great excitement and sense of accomplishment in doing successful transactions.
Understanding the language of real estate is exhilarating.
Understand that banks are not that easy to deal with when it comes to short sales. Short sales are tedious and time consuming as well as frustrating.
You can get the same results by offering to purchase the mortgage from the bank. Offer to purchase the first at a discount.
This process should be conducted with the help of your lawyer or title company. To show creditability, I deposit the amount of my offer with my title company and have my representative contact the mortgagees to make the offers.
If there are two mortgages, offer to purchase the first mortgage and than notify the 2nd mortgagee of your intention to foreclose (As a lender, you will have more leverage with the mortgagee.
If you use this process, make sure the seller is on board with you and that, for a fee, they will sign the deed over to you in lieu of foreclosure.
I hope my comments were helpful.
Oh, if you do not have the money, take an option to purchase the notes at a discount, get the deed and than place a loan on the property to pay off the existing mortgage.
Charles Parrish
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