Question on a real estate short sale ?....

Doug · Jun 25, 2012

Here is a price history of how the offering price has dropped.

Price History

DateDescriptionPriceChange$/sqftSource 06/19/2012Price change$99,900-28.6%$116Coldwell Banker Residential Brokerage - Branford Office
05/18/2012Price change$139,900-6.7%$163Coldwell Banker Residential Brokerage - Branford Office
05/01/2012Price change$149,900-6.3%$175Coldwell Banker Residential Brokerage - Branford Office

A friend of mine used to own this unit, his plant ( in Ct) closed and he lost his job early this year, but was able to transfer to NC for close to the same money, kind of a win.

He bought this for like 80-90 k around 1998, got in some financial difficulties took out 2nd and 3rd mortgages when it was easy to do so ( 2005 ish). These are condo units , about 60 of them), peaked at around 220k or so.

Well they let him get these loans and such to somewhere North of 150k.

Out of curiosity if the amount were 150k owed and it short-saled for 100k, would the bank (s) try to get that 50k back from this guy legally ? He makes around $18-20/ hr which is not great in Ct, but OK in NC. I know his credit is shot. And NO it is not me !

I'm thinking of making an offer on the place. The bank dropped it from 140k to 100k in one shot. Other units there are typically listed at 165-185k...but have been for sale a long time.

If I offered 50k would it even be considered ? I'd seriously think about it at 70k. I know the condition of the unit well....not bad, needs some doors and windows replaced, kitchen remodel would be good....new appliances and countertop.

It has new floors.

I'd never get a mortgage, I'm a cash buyer with poor credit.

Mr_Mark · Jun 25, 2012

I am not sure if I understand your situation right but once the bank accepts a short sale thats it. They can not go after the difference owed. Your cash offer might be considered. It is worth making imo. I am sure you know this already but condition of the house, time of the year, other offers, which bank it is, is all important

Doug · Jun 25, 2012

Well basically this guy ( Rob) owed like 160k on it, even though he bought it for more like 80k. So walked out on the place, leaving it to the bank. I figured it would sell for at least 140k, but No, and the bank now cut it to 100k....like let's get rid of this one !

I know it was built in 1986 and the furnace is original, so maybe 8k coming up to fix that. I guess no harm in a 50k offer ?

I thought the lender might have some recourse in these situations ? I know if I bought it it that title would be clear.

Mr_Mark · Jun 25, 2012

I am 95% sure there is the same rules out there as here in CA. Did Rob refi? or does/did he have a 2nd? and just to clarify this is a Short sale? also what bank was it?

Mr_Mark · Jun 25, 2012

Because your offer is all Cash, that gives you a slight edge. Most likely it will get rejected, because it is so low, but I have personally had offers like that accepted. Complete low ball offer, but you wont know till you try. or bank might present a counter offer. Just like any negotiation start low and come up. You can always raise your offer later on. Bank sounds pretty motivated to move this property, by them dropping the price that fast, which is good for you

ProPokerPlayer · Jun 25, 2012

$8K to replace the furnace??? Let me know if you get it i might drive up there for that job...

MattyMatt · Jun 25, 2012

Put that offer in. Worse they can say is no, and when they do, I'm sure they will counter, and you will know where you stand. Good luck.

Doug · Jun 25, 2012

ProPokerPlayer said:
$8K to replace the furnace??? Let me know if you get it i might drive up there for that job...

Just a guess. I'm talking about a heat pump split system, so the condensing unit also. I seem to recall somebody there saying they paid something like that.

Doug · Jun 25, 2012

MattyMatt said:
Put that offer in. Worse they can say is no, and when they do, I'm sure they will counter, and you will know where you stand. Good luck.

The seller has to pay any back taxes, liens, back condo fees before the sale, right ?

Doug · Jun 25, 2012

Mr_Mark said:
I am 95% sure there is the same rules out there as here in CA. Did Rob refi? or does/did he have a 2nd? and just to clarify this is a Short sale? also what bank was it?

I'm pretty sure he re-financed at one point and then later took out a second mortgage. He kind of said screw it and took a vacation to Europe too and blew up his credit cards as well.

CoachCB · Jun 25, 2012

Doug said:
I'm pretty sure he re-financed at one point and then later took out a second mortgage. He kind of said screw it and took a vacation to Europe too and blew up his credit cards as well.

Sounds like an upstanding citizen!

I'd be careful of getting into the condo market....but if you can get it for less than half of market value you're doing great.

---

ThreeKings · Jun 25, 2012

If the banks allow the short sale your friend will get a 1099-C for discharge of debt. Since it sounds like he took cash out on the refi's and didn't use it to improve the property some of the debt forgiveness will be taxable. If he is insolvent at the time of the discharge he won't have to pick up the income if he gets a cpa that knows what he is doing.

Doug · Jun 27, 2012

Three Kings said:
If the banks allow the short sale your friend will get a 1099-C for discharge of debt. Since it sounds like he took cash out on the refi's and didn't use it to improve the property some of the debt forgiveness will be taxable. If he is insolvent at the time of the discharge he won't have to pick up the income if he gets a cpa that knows what he is doing.

I wouldn't call him insolvent. He works a factory job ( Unilver) maybe $16/ hr in NC instead of $18+ in CT.

I talked to the realtor and she said there were a couple of offers on it, when asked what I was thinking about, I said 60k, she said two way higher offers. This one will go for 90K very soon. It needs a little work , but is very cheap for where it is.

It's a good deal at 99k , IMO !
http://www.realtor.com/realestatean..._Clinton_CT_06413_M41422-89676?ex=CT538862669

Mr_Mark · Jun 27, 2012

Doug said:
I wouldn't call him insolvent. He works a factory job ( Unilver) maybe $16/ hr in NC instead of $18+ in CT.

I talked to the realtor and she said there were a couple of offers on it, when asked what I was thinking about, I said 60k, she said two way higher offers. This one will go for 90K very soon. It needs a little work , but is very cheap for where it is.

It's a good deal at 99k , IMO !
http://www.realtor.com/realestatean..._Clinton_CT_06413_M41422-89676?ex=CT538862669

Remember since your offer is all cash they will usually take that over a conventional loan. Even if you are a 10-15k below their offer you stand a good chance. Especially if it is smaller or foreign bank. I am unfamiliar with that area but it does look like a good deal

Cobra07751 · Jun 27, 2012

If the bank sells the condo for $100K and the seller owed $150 he will have to report the $50K as income on his taxes the following year.

Doug · Jun 27, 2012

Well I won't be buying this one, there is a 90k offer on it.

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