Re: pre-foreclosure HELP!!!!

Posted by Amy Francis on December 17, 2002 at 22:49:19:

In Reply to: Re: pre-foreclosure HELP!!!! posted by Zidzi on December 16, 2002 at 18:26:40:

Zidzi, thank you for your reply.

I offered the owner 80K before, flatly turned down. He came back with 110K I tried to go back at 90K thru the realtor (this one happens to be in my buyer's rep's office so it's dual-agency, she said I could get another buyer's rep but I felt indebted for her having shown me a few houses (and a little bullied)).

Anyway, they verbally approached the owner and he said No. I asked for his bottom line and he said 110K because that's what he owes.

My question is this: doesn't the owner still owe the secondary lien holder if his debt isn't satisfied? What actually happens on down the line?

Thanks again,
Amy

: Hi there
: I will give you advise only based on what I have been able to do personally. Based on your facts, you have a seller who is not motivated. I am not sure they understand a few basic things at this point:

: 1. They are in the process of losing their home.
: 2. They will have a deficiency judgement
: 3. The second lienholder will end up with nothing
: 4. The seller has no bargaining chips at this point
: 5. You are God-sent and they should cooperate with you.

: This is what I would offer:

: Enter into a contract with the seller for $70K, yes, $70K . I know he thinks it is worth $110K but the Bank will allow him to sell short of what he owes (hence the phrase SHORT SALE) for the following reasons:

: 1. They need to get rid of the non performing debt from their books; it looks bad to shareholders

: 2. The Lender knows that even if they foreclose they will have to fix it up, list it with a realtor and pay commission and it may not sell for a couple of months during which there are holding costs

: The lender will end up recovering only about $80K after several months anyway so why not accept $70K today and write off the rest. All said and done the Lender does not really lose at all. They recover some from the sale and the difference they writeoff as a loss.

: Word of advice: Do the title search and make sure that the liens and judgements do not cloud your title otherwise you will not have gotten a a good deal. If you decide to do a short sale you will need total cooperation from the seller.

: If that is a possibility then here is a checklist of things you will need to get to the Lender:

: 1. A contract duly executed for the $70K amount
: 2. A realtor's opinion of the value of the property
: particularly why he/she thinks it can only sell for about $70K on the market "as is"

: 3. A hardship letter from the seller detailing what has led to his current situation financially so that he is now in foreclosure

: 4. An approval from your lender that you are going to get financing

: It will take some persuading the seller so that he is agreeable to this. I have worked with sellers who started out really upset that I was offering so little for their home but in the end once they understood the whole process and saw the letter from the Lender agreeing to our contract and offering even more concessions like paying for closing costs they were grateful.

: All the best and if they are totally opposed to your offer, go find another one, they are out there.

: Good luck and please post your success story here.

: Zidzi

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Comments:
: Zidzi, thank you for your reply.

: I offered the owner 80K before, flatly turned down. He came back with 110K I tried to go back at 90K thru the realtor (this one happens to be in my buyer's rep's office so it's dual-agency, she said I could get another buyer's rep but I felt indebted for her having shown me a few houses (and a little bullied)).

: Anyway, they verbally approached the owner and he said No. I asked for his bottom line and he said 110K because that's what he owes.

: My question is this: doesn't the owner still owe the secondary lien holder if his debt isn't satisfied? What actually happens on down the line?

: Thanks again,
: Amy

:
: : Hi there
: : I will give you advise only based on what I have been able to do personally. Based on your facts, you have a seller who is not motivated. I am not sure they understand a few basic things at this point:

: : 1. They are in the process of losing their home.
: : 2. They will have a deficiency judgement
: : 3. The second lienholder will end up with nothing
: : 4. The seller has no bargaining chips at this point
: : 5. You are God-sent and they should cooperate with you.

: : This is what I would offer:

: : Enter into a contract with the seller for $70K, yes, $70K . I know he thinks it is worth $110K but the Bank will allow him to sell short of what he owes (hence the phrase SHORT SALE) for the following reasons:

: : 1. They need to get rid of the non performing debt from their books; it looks bad to shareholders

: : 2. The Lender knows that even if they foreclose they will have to fix it up, list it with a realtor and pay commission and it may not sell for a couple of months during which there are holding costs

: : The lender will end up recovering only about $80K after several months anyway so why not accept $70K today and write off the rest. All said and done the Lender does not really lose at all. They recover some from the sale and the difference they writeoff as a loss.

: : Word of advice: Do the title search and make sure that the liens and judgements do not cloud your title otherwise you will not have gotten a a good deal. If you decide to do a short sale you will need total cooperation from the seller.

: : If that is a possibility then here is a checklist of things you will need to get to the Lender:

: : 1. A contract duly executed for the $70K amount
: : 2. A realtor's opinion of the value of the property
: : particularly why he/she thinks it can only sell for about $70K on the market "as is"

: : 3. A hardship letter from the seller detailing what has led to his current situation financially so that he is now in foreclosure

: : 4. An approval from your lender that you are going to get financing

: : It will take some persuading the seller so that he is agreeable to this. I have worked with sellers who started out really upset that I was offering so little for their home but in the end once they understood the whole process and saw the letter from the Lender agreeing to our contract and offering even more concessions like paying for closing costs they were grateful.

: : All the best and if they are totally opposed to your offer, go find another one, they are out there.

: : Good luck and please post your success story here.

: : Zidzi

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