Short Sale Deal Case Study – Part 1
September 4, 2010 by Mike Moulton
Filed under Buying Houses, General, Weekly Tips
This week on AskMike, Mike Moulton takes you on a ride in his MDU (Mobile Deal Unit) on the streets to a real estate deal that he is working on that requires a short sale. Mike discusses the deal overview on the way to the property and then debriefs afterward. This is an interesting deal because the loan is in a deceased borrowers name. Watch the video below for the details and see the numbers of the transaction below. Mike will introduce new videos as the deal unfolds. A special thanks to Tim from California for writing in and asking us to walk through a deal.
Here are the high level numbers for the deal (I update to more precise digits in a later video as we work the deal):
House value in market condition = $185K
Current mortgage balance (1 loan) = $176K plus a few back payments, interest, etc.
Estimated Repairs (carpet, paint, appliances, blinds) = $6K
Our offer to the lender = $130, 562 (we always offer a “calculated” number, not rounded off). Generally we take about 85% of what we think the BPO (broker price opinion) or appraisal would be, then 85% of that number (approximately).
If you missed last weeks video on “Can a Foreclosure Be Reversed Back to A Short Sale” then click the linked text.
Also, if you have a question you’d like answered, please visit our contact us page and submit it to The Sharp Investor.
Take Care and Happy Investing!
Mike
Great video Mike! I look forward to following with you through this deal.
What is the reasoning behind the 85% of 85% of BPO calculation? That’s the first time I’ve heard that one. Have you found that to be a quick way to generally get where you need to be?
-Cameron
Hi Cameron,
Thanks bud for the kind words.
The 85% of 85% of the BPO is just a calculation that we have found works best after analyzing a number of deals that we’ve done. Its very similar to 70-72% of the market pricing but the determining factor which makes each deal unique is where we think the BPO will come in at. For example, if you had a newer home in a cookie cutter neighborhood with no repairs than that BPO value is very easy to determine. But, if you have an older community where there is a lot of old architecture, new archictecture, renovations, etc. than the BPO value takes a little more time and it could be interpreted a lot different by the BPO agent/appraiser. I hope that helps.
I like that 85-85 rule. I may start implementing that.