Anybody ever tried to do a High Bid Sale combined with a short sale?
3/1 SFR where the owner is deceased and owes $80K on the property with a USDA mortgage when all fees and interests added up. $60k principal, $20k in fees. Property needs about $20-$30k in rehab on top of that since the property is not habitable as is. Sale comps are in the $70-$80k range.
I don’t want to pay the fees/interest associated with taking it on subject-to and getting the mortgage current. Instead, the USDA tells me they’ll do a short sale with a certified appraisal which means I could probably get the price down to $40-$50k or so.
I already have the property tied up with an option from the heirs. What I’d like to do is find a way to do a HBS once we have the short sale paperwork in place and then use my buyer’s funds to close the deal out rather than trying to hit up one of my lenders. However, I don’t have much experience with short sales so wanted to know if there were any red flags with trying that.
I’ve done a short sale in a USDA property then sold with a highest bidder sale. Once they approve the short sale, you usually have 14 days to close.
USDA mortgages are harder to short compared to other type mortgages. Unless the seller can prove a hardship and show that they have no money in their bank account, they won’t short the payoff. There should be substantial deferred maintenance too to prove why the house is worth less. Keep in mind, with a short sale, the seller cannot receive any cash at all.
Short sales will eat up 4-6 months of your life. There are other, easier ways to make money with real estate.