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April 30, 2006
How Much To Offer A Bank
What percentage should you ask the bank to accept on your "short sale?"
Example: ARV is $200,000, $190,000 mortgage, and
the property needs $5,000 in
cosmetic repairs.
Obviously, there is no equity in the property and therefore the only way to do a deal is a short sale. So what and how do you ask the bank?
Mr. Loss Mitigator I will offer $114,000 (which is 40% of $190,000). Will the bank discount the note up to 40%? If not what is the percentage they will accept? Or is everything depended on the banker's appraisal (BPO)? I have read that you should only buy properties 65% or less of market value so that you can: 1) wholesale it or 2) sell it. Thank you. John
My rule of thumb of beginning offers is 60% of retail minus the repairs needed when making your initial offer to loss mitigation. Also this number is flexable based on a number of conditions-like the market and whether it's soft or strong. You'll want to experiment on your offers. Also figuring in is going to be how much inventory the bank is currently holding in it's REO (real estate owned) Department.
Posted by paulwells at April 30, 2006 12:49 PM