Homeowner Walking Away, Wants 5k to Deed the Property To Me?hort Sale

[D.C. Sparrow]

Hey Experts,

I signed a contract to do a short sale with a homeowner. However, now they won't sign authorization to release nor continue with the short sale. They want to walk away and will sign a warranty deed for 5k. The property is in a great area. The mortgage is 239k, Rehab cost 35k to 45k, property once rehabbed could sell for 350k. What legal and bank issues will I face? What's the best strategy for this property? The property is in Florida.

[Jon Holdman]

@D.C. Sparrow you seem to be saying its worth $350K if someone does $50K of work on it. I infer from that it is worth $300K AS IS. But that may not be true. With this much work it may be worth less, perhaps significantly less.

If it is worth $300K as is, and the bank is only owed $243K, they are not going to do a short sale or a discounted pay off. I shouldn't say they absolutely won't, anything is possible. But it seems unlikely with this much actual equity in place. The bank can take it to foreclosure, start the bidding at what they're owed plus the costs and recoup everything they're owed. Even if they tack another $10-20K in legal costs on for the foreclosure and it sells at a discounted price of $275K they come out whole. I see no motivation for them to do a sort or a discounted note sale.