Hi,
I am brand new to this and am getting ready to purchase your ‘package’. I was wondering if there is ample information in the course on how to properly negotiate with the lender in a foreclosure? In other words, do you go into great detail about this in the course material? Negotiating at this level with ‘skill’ would seem to me to be very key in a person’s success.
Also, in a situation where the loan has already been foreclosed with the lender paying all those expenses, would you have as strong of a bargaining position?
Please let me know as soon as possible since I am wanting to buy the material you are offering.
Thanks!
Tom
Tom,
Yes!! The material does teach you how to negotiate with lenders. This is one of the most important pieces to the game.
You have more leverage working with homeowners in pre-foreclosures then those that have already been foreclosed on.
Hi,
I have submitted my first short sale and am seeking negotiating advice. The lender says the first offer was too low and that repairs submitted are primarily cosmetic. They will accept a second offer, but want to see structural repairs (electrical, plumbing, foundation, etc.) The house is only 2 years old and those type of repairs are a stretch. Secondly, the lender says they want to receive 90% of FMV. I’m willing to go up to about 70%. Any suggestions/creative ways on how to negotiate this (i.e. get them to come down) or is this deal unsalvageable>
One last question – Option One holds both first and second liens. I submitted one offer (per your Short Sales book). Should I submit two Hud-1’s to show how first and second will be paid? Any tips on dealing with Option One?
Thanks,
Tracy
Tracy,
What constitutes too low? Give us some numbers to work with.(ie, FMV, Bal of 1st and 2nd and what you offered) Is it an FHA or CV loan? Remember FHA will get at least 82% from HUD, so they wont’ give you 70% or less.
If all you have is cosmetic repairs then only submit those.
As for the lender holding the 1st and 2nd. I would send in one HUD stating the payoff of the 1st on line 504 and the payoff of the 2nd on line 505. They should total what you want to offer the lender to satisfy both combined mortgages.
Once I know the numbers, I might be able to offer you some negotiating offers.
Hope this helps!!
Thanks,
Thanks for your help! The loan is not FHA. It is conventional. Here are some numbers: The owner owes approx. $305k (including fees). The house on the low end could sell for $275k and on the high end $315k. It’s located in northern Virginia and values are sliding here, so FMV is a moving target. Based on realtor’s comps I’ve estimated $299k in its current condition. (I haven’t ordered an appraisal at this point.) The owner owes $241k on the first and $60k on the second. I received an estimate of $30k from a contractor for repairs (finish basement, new carpet, new tile, etc). Those repairs would bring the value to $315k. My offer was $189k (~60% of FMV)slightly to test negotiating room. I did not split out 1st and 2nd lien in the offer, but will do that in the second offer. I have no problem adjusting up, but 90% of FMV seems to cut the margins too thin if I try to wholesale the deal (preferred exit strategy). Plus, there are no structural repairs to submit. Any thoughts? Are my numbers too conservative>
Thanks so much for your advice!
P.S. – the bank says they will not order a BPO, I would need to purchase an appraisal…
Tracey,
Your first offer was low but not insulting, it was a good start and now you can go up. When making an offer, prepare an REO worksheet so you know what they are looking at from their end. For instance: if you get and appraisal for 299k, they will use that as their base number. From there they will start deducting their costs.
1)Realtor to sell the property(6%)
2)The Arrearances they already lost.
3)The holding costs for lost interest, unpaid taxes, covered insurance, HOA fees, repair costs and Attorney fees to conduct the auction.
They know this is what their expenses are going to be too sell that property after they get it back at the auction.
Not knowing your market in Virginia, I estimated their Net Profit to be about $225K at 120 DOM and $218K if the house sits for 180 days.
My next offer would be $206
As for your HUD I would list the 1st lien at $200K (.82cent/dollar) and the 2nd lien as $6k (.10cents/dollar)
Email me and I can send you what I use to project what the lenders will make as a net profit.
Hope this helps!!
Thanks so much! This is outstanding! I am sending over an email now for the REO sheet you mentioned.
BTW – I haven’t ordered a BPO or appraisal at this point. Should I order one? Any other supporting documents I should send?
Thanks!
Tracy
I sent in a short sale packet to Option One Mortgage. They came back and said their comps were a lot higher than what I offered so I would need to get an appraisal and email it to them. I confirmed with a local realtor and Option One is saying their comps are about 210,000. This is 60 to 85,ooo higher than what comps are in our area. I faxed them three separate comps and they say that they did not receive them and the bottom line is I need an appraisal because they are not going to order one. Current owner owes about 90,000. I offered 65,000 with the house needing 20,000 in repairs (nothing major). Market price is about 125,000 to 150,000. Sale is scheduled for May 4. Do you have any suggestions?
I would ask them if they are planning on doing a BPO. That is the next step in the process. This is very similar to an appraisal and is what most banks use to get an accurate estimate of the property.
Last resort, if they want an appraisal, you need to get an appraisal. Unfortunately this will be an expense to you and you don’t even know if they will accept the offer. If you think the appraisal will be in your favor, I would do it because you are building a stronger case with the lender. Or you can hold your ground and wait til the bank gets a little more motivated and submit your offer again in 3 weeks. This time asking they get a BPO.