Details of my first short sale...Ideas or critiques

[Brian Kraby]

Ok,
I have a seller of a duplex that wants out. Owner is in default and is behind about 20k. Sheriff's sale is end of October. Technically, the owner gets postive cashflow but has other properties that don't and just wants out. Here are the details that I have at this moment...
type: Duplex, both units currently rented out
Built: 1903
sf: 3400
gross rents= $1900/month
owes around 200K
Taxes: actually all caught up, but are $4200/yr

Owner said he just got a statement from "servicing company" saying they want to work something out, but the owner dosn't care and wants to walk away. My idea was to deal with the bank on a short sale for around 100k and meanwhile find an end buyer for around 150k. I would use a "flash funder" for the 100k purchase and do a double close on the same day to the end buyer. At 150k the place would still cash flow for the buyer and thus making it a win/win situation...right?

Two problems. 1. dealing with banks to even agree on a number
2. what if I get the number I want but can't find an end buyer.
My backup plan would be to use HML to fund the front end until I could find an end buyer. Any HML's out there that would care to finance for up to 12 months until it sold?

Any other ideas or critiques on this strategy or source of funding?

[Justin S.]

You'll need to:

1. Find out the fair market value.
2. Put the hardship package together
3. Have the owner sign an authorization to release so you can talk with the banks.
4. Have the owner give you equitable or marketable interest either by signing over the deed to you or a signing an option contract.
5. Start marketing the property to find an end buyer.

If you can't find a buyer during your negotiations with the bank, then you are asking too much for the property. Your goal is to buy at a discount and sell at a discount so you can move the property.

good luck.