Monday, May 14, 2007

Short sale updates

I haven't had much success negotiating short sales since I bought 2 houses in February. It's not been for lack of trying. I have about 6 short sale packages in the works at any given time. However, they have not been the ideal situation for a short sale. A short sale works best when you have 2 loans on a property and the senior loan is in foreclosure. The junior loan is generally willing to take a large discount rather than bid at the auction.

I was close to a deal on one short sale - about $2k difference when a sleazy appraiser/ realtor talked the woman into putting her house back on the market. He had appraised it for the bank at $70K and its now listed at $84k. The house had been on the market for 6 months previously with nary an offer. The house has no chance of selling before the auction and the woman will have a foreclosure on her record. As I referenced in a previous post the NY Home Equity Theft Act makes selling this type of property difficult plus the price is way too high for the location. The bank maybe thinks that I was trying to steal the property but the loser will be the homeowner here. The banks operate in remote areas of the country and have no clue as to the actual market and so give lots of credence to local appraisers. I have lost a lot of respect for appraisers during my time doing this business. They seem to suit the needs of their client rather than any reality based estimates.

I also got a call today from Litton loan on a SS offer. This company has to be the most disorganized loss mitigation company out there. I had faxed the offer 4 times over a 6 week period before they actually got the information to the right person. They gave me 3 different fax numbers and an equal number of account managers before it got to the right person. When I get back from my business trip I will have to see if they are flexible. This is a single loan so chances are not great.

I also found a great house in my town that my wife wants to move into. This will solve my problem of buying a house that I talked about since I feel I can get it far below market value and we can buy subject to the existing financing of the first loan. This one has the dual loan scenario. It's the first time I have gotten a response from someone in my town but I didn't get it from my mailings. I went to the house and put a post-it note on the door telling the owner I was interested in buying his house. This worked great and I may try it more often. I won't need to get much of a discount to make this work since it is in one of the best neighborhoods in town and the price per sq ft will be under $90 when other homes are selling at $120.

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