Last week, I was fortunate enough to get multiple offers, on one of my "short sale" listings. I received three offers on the same day. That's always a real good thing. I discussed the negotiating options with the Seller and we decided to ask for "highest and best" and gave the Buyers 78 hours to resubmit their offers. Well, the strategy worked pretty well, and one of the offers was increased by $11,000, which was just high enough for the Seller to be able to accept it. Being that the property is going to require a "short sale" it was important to get as high an offer as possible and as close to market value as we could. One of the keys in getting the bank to accept a "short sale" is to get them a realistic offer based on current market conditions. Low ball offers will not work.
Anyway, the three most recent sales were at $189,000, $193,000 and $200,000 in that order, from most recent sale. These sales show a distinct pattern of decreasing property values. The price, we have negotiated, is $200,000 with the Seller contributing $7,000 towards the Buyer's closing costs, this is effectively a selling price of $193,00 and is right in line with the recent comps. So hopefully, we will be able to get the Lender to accept the deal.
Here are the specifics relating to this transaction:
- The house was purchased as new construction in early 2006 for $225,000.
- It was purchased with $5,000 down including closing costs and the existing mortgages total $220,000.
- The first mortgage is with Countrywide and had a starting balance of $157,000.
- The second mortgage is with American Home Mortgage and had a starting balance $63,000.
- When he bought the house is was probably only worth $205,000 to $210,000. A little fishy appraisal action took place here, in my opinion.
- After all costs and paying off Countrywide there will only be about $18,000 left for the 2nd mortgage.
- There are currently 1,600 active listings and only 125 pendings in this neighborhood and the property has been on the market for 8 months. 3 with me.
So, basically, we are asking the 2nd Lender to take a $45,000 loss on a property they probably should not have financed to begin with.
What do you think? Any hope showing? Or, are we a dollar short and many days late?