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Personal Residence Short Sale Scenario

#1 User is offline   WeBuyHousesInGA 

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Posted 23 July 2010 - 08:13 AM

Long time no post, no visit. I see some old friends are still posting. I hope you all are well.

I've hung up my REI cape for a little while but I am now in the market for a new personal residence. I have a short sale opportunity under contract. Unlike during my days as an REI caped crusader this time there is a listing agent in between me and the decision makers. I'm wondering what to do to get the best deal possible without blowing the opportunity. This is a very good school district with low crime... great for raising my daughters.

The property was originally listed for $575k but then dropped to $525k. 1st mortgage filed foreclosure notice for July on a $317k note. Owner filed for bankruptcy to stop the sale. There's a HELOC in second position with a $150k limit. Back in my flipping days this would have been up for grabs for as low as $332k -- that makes the 1st whole and gives the 2nd 10% of their debt. But the listing agent -- a "Certified Distressed Property Expert" -- wouldn't present my offer until I got the price up to $464,000. I think it's B.S. but I wanted to get the ball rolling. Then again I have no clue what's going on between the banks and Uncle Bernanke these days. If the 2nd is somehow sticking to an 88% of BPO rule, which seems crazy -- risking $317k to save up to $135k -- but again I'm out of touch with what's so in short sales, then for my offer of $464k to take I'll need the BPO to come in at $527k or better. Repairs are easily $40k... double with a general contractor. County tax assessed value is $580k -- typically 10% below market value in this area -- and the neighborhood retail sales are in the $540-680k range.

What say ye? How can I get this deal for the best possible price, or am I already pretty much there given the fact that it's a nice area?
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#2 User is offline   WeBuyHousesInGA 

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Posted 23 July 2010 - 08:24 AM

To be precise, the listing agent did present my lower offers to the seller. But she coached the seller to counter. So my offers never made it to the HELOC decision maker where the amount owed versus available to collect could be considered.
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#3 User is offline   WeBuyHousesInGA 

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Posted 24 July 2010 - 06:04 AM

I'm answering my own question here. It's pretty obvious what's going on. The listing agent is negotiating her commission off the total balanced owed on the 2nd and asking for a full release of debt for the seller. I guess I don't blame her for doing this for herself and for the seller. The 2nd is going to look at this as a no-brainer -- of course they'll agree to these terms!

Now what I need to figure out is how to turn this into a real deal for me. I plan to ask for a price drop based on what I find during due diligence. But how much can the listing agent and the 2nd stomach without walking away from the deal? That's the real question here.
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