Short-Sale Deal taking too long. Will BRRRR work?

Question

Hi all,

1st. Deal. Did not have enough money for it.

2nd. Deal. Is a short-sale that I have been waiting for almost a year.

This is what I have so far on my second deal.

a. Had to do a refi on my current home to get enough money for a down payment on my short-sale.

b. My offer was accepted and then the bank came back raising the price from $110,000 to $125,000. The number still work for me in this area. I agree and sign the contract.

c. Is been a year and looks like the current owner of the house is taking a long time to provide all the required paperwork to keep living in the house. I understand this is normal on a short sale and there is no problem for me.

d. My Question. The price on this property when up and the new value is between $160,000-$170,000 Can I do the BRRRR strategy here and if I can.  Does a hard money lender be whiling to give me a loan on this?

3rd. Deal Since I didn't want to keep waiting and paying interest on my home refi. I found a property cash and doing my closing on the 18 of this month. will bring about $240.00 cash flow after taxes, insurance, vacancy and repairs. ( since I did this 3rd.Deal now I don't have enough money for the down payment on 2nd Deal.

Thanks in advance. Hopefully my context will help you understand my situation.

Cheers!

Rene Escalante

John Warren · Answer

@Rene Escalante you have several other solid agents on here already who have commented, but I 100% agree that something is off here. I wouldn't waste a lot of mental energy on this deal as it seems destined to die. Short sales normally only take a few extra months in this environment and most of the attorneys here in Illinois at least know how to work short sales now. My attorney has literally negotiated thousands of these things and he cut his teeth on these back during the crash. Back then, short sales took forever because banks didn't have a process for the overwhelming amount. Now banks and attorneys in this area know how to handle these so you should be able to conclude negotiations quickly.

I would recommend jumping on a call with your attorney. You want to know if there is an approved short sale price from the bank. You also want to know if there are any second positions loans that may be giving you issues. Lastly, you want to know why the seller hasn't provided docs. All of this is a huge red flag to me.

Wayne Brooks · Answer

Just so you know, the lender on a short sale will do a value update (new bpo) after 60 days.  A year is a ridiculous amount of time...expect this one to die.

Rene Escalante · Answer

I really appreciate all the input from all.

This is the last communication from the Attorney last week 2-15-2022. I am changing the name of the bank. not sure If get in trouble to post it here.

"Bank" finally confirmed the file as complete for the moment and that a specialist with "Bank" will be assigned to the file. Sounds like the final review process could possibly take some time but I’m hoping since they’ve already gone through this file before, it will not take long. I have it on my calendar to call again next Tuesday if the specialist has not been in touch to see if we can request any sort of rush on the review. I'll be in touch once we have further update.

John Warren they do have a second loan on the property.

Thanks!

Rene Escalante

Minna Reid · Answer

Who is the investor that specified no investors?

Russell Brazil · Answer

Yes I have to both questions.

Minna Reid · Answer

@Russell Brazil I think maybe you misunderstood the request somehow or it's some other type transaction, or the "negotiator" does not really have expertise in the subject matter? Did you mean wholesalers? Cause yes short sales and wholesaling don't mix. But nothing stops investors from buying short sales. Certainly not lenders.

I have personally been working short sales on the list side for almost 15 years - its been 90%+ of my business all this time, I have closed hundreds. I have worked with every lender, every investor, seen every document, every requirement. This has never been one ever.

Have you personally worked a short sale on the listing side yourself? Have you seen this requirement come directly from a lender?

Russell Brazil · Answer

Then why do the short sale negotiators vwry specifically state "no investors" on half our short sale documents?

Minna Reid · Answer

@Russell Brazil Lenders do not care one iota whether an investor or homeowner is buying a short sale - never have, and don't today. Maybe you are confusing REOs and short sales?

And as usual I agree with Wayne - if its been a year, somethings wrong. Sounds like an unmotivated seller since he won't get his docs in. A short sale with an unmotivated seller is a lost cause.

With that said I have had a handful of short sales over the years that did take over a year - one took over 3, and none were due to seller issues ( I wont work with unmotivated sellers ). Lenders can and do screw these a multitude of ways all the time, but the average short sale approval should really not take more than a few months.

Russell Brazil · Answer

Additionally, most lenders will not approve a short sale to an investor these days

Short-Sale Deal taking too long. Will BRRRR work?

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