New lead motivated seller, I need short sell advice

[Christian Bors]

Hello,

A lead came in today from a gentlemen who wants to sell his house immediately. I went out to the property this afternoon, and I would classify him as extremely motivated (aka he offered me the keys). The problem is, I am not sure what I should do with this lead. He is in the process of getting foreclosed. He owns a lawn care service that use to do 1.5 million gross annually, however he became sick and couldn't work for 8 months. In doing so, he hasn't made a mortgage payment since March. He is in discussions with a bankruptcy attorney, however he would prefer to avoid filing. He owes 262k on the mortgage and agreed to sell the property for as little as the bank would accept. Its difficult to say what the property is worth since it has 4.5 acres (2 separate parcels), 2000 sqft home, plus a 1200 sqft garage for his commercial equipment. He said a realtor gave him a number of 330k 8 months ago when he thought about selling. I am still in the process of figuring out the ARV. Anyways, I need advice on how to work this lead. I would like to wholetail or flip the property, but not sure what the next steps would be. I need to get the purchase price to about 200k. Also, I am a licensed agent so I am not sure how that would play with the bank. I am hoping someone can give some insight.

[Denise Evans]

In my experience, banks generally accept offers in the range of 15% to 20% less than fair market value, as determined by the appraisal they order. It is important to be present when the appraiser inspects the property, so you can point out all property defects and obsolescence that will affect value. You should also present the appraiser with at least 6 comparable recent sales and 6 current competing properties on the market, with explanations regarding how the subject property is similar to, or differs from, those properties.  Banks use appraisal management companies for appraisals, which means an average cost of $75 and a turnaround time of 3-5 business days. That's a lot of pressure on an inexperienced appraiser (who else will work for $75?) so any resources you can provide will probably be assimilated into the final appraisal. The fact that you are a real estate agent makes no difference except for payment of a real estate commission. Some will allow you to be paid all or part of the commission at closing. Most will not. You might want to get a friend to be the listing agent.  Some banks require an anit-flipping affidavit saying you will not flip within 90 days. Most do not. Most simply require an arms length affidavit.  I would not be afraid to sign a purchase contract for $200,000 and see if you can get it there. Earnest money can be as low as $500. The seller usually doesn't care at this point, and the bank has no dog in that fight. Do not trust the seller to fill out short sale paperwork properly. Get an authorization letter and YOU fill it out and then get his signature. Many short sales fail because of incomplete or inaccurate paperwork, not the numbers.  If the owner is H&W but only H signed the note, only H assets and income go on the forms. But, complete family living expenses go on there, not just half.  Good luck!