Author Archives: Isaac

Short Sale Done!

After six months, two banks, two realtors, and two private investors, the short sale has finally closed!

Here’s how it panned out:

Value: $85,000
Final price: $45,000
Repairs: $10,000
Total Investment: $55,000
Total Equity: $30,000

Now on to the next project!

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Posted by on June 28, 2011 in Uncategorized


The Verdict Is Finally In

Update: The bank accepted my counteroffer!!! I must say I’m a bit surprised they went for it but given the current foreclosure climate, it makes sense to just take a loss and move on than to keep dragging it out. I have until July 7th to close.

I’m funding this deal using an equity loan on another property. This loan process has been more stressful for me than the short sale if you can believe it. It’s been three months since I started the process and up until this morning I was still unsure if and when the loan would actually close.

Long story short, I had the worst loan specialist working on my file. She would never answer or return calls. She would only respond to emails when she felt like it. Early on I lost my patience with her and reported her to her boss. He promised to personally oversee the processing of my loan and would make sure to expedite it. Needless to say, he didn’t.

After hearing that the bank accepted my counteroffer, I called the bank to get a final answer from someone as to the status. Turns out that both my original loan specialist and her boss have since left the company, even though I had just received an email from her last week.

I have a new loan specialist who apologized and assured me that we should be able to close before the end of the month. Yay!

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Posted by on June 5, 2011 in Vassar


Counteroffer In

Yesterday we received the counter offer from the bank for $51K. Considering that the current loan balance is around $60K, that isn’t much of a discount. Certainly not enough to justify the trouble of a short sale. I countered at $40K which is the most this deal will bear. Let’s see what happens.

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Posted by on May 5, 2011 in Vassar


Slow Going

Been a while since the last update on the Vassar property. Sadly, it’s because there isn’t much to report. The contract has been submitted to the bank and we’re waiting on their response. Hopefully they will just accept my offer and we can move forward. If not, we’ll either have to renegotiate or just walk away. Only time will tell.

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Posted by on April 29, 2011 in Vassar


The Miracle Worker

I’m not a big fan of realtors but the one I’m currently working with just might convert me.

The lien we discovered threatened to kill this deal but my realtor, Gayle, pulled a rabbit out of her hat. She contacted an attorney who negotiated with the lienholder to grant a partial release of the lien. They agreed to  reduce the lien on the property to $5,100! That’s 48% of the original balance. That move alone earned her her paycheck in my book.

So now we’re back on track. Once the paperwork for the lien release is received, Gayle will have the BPO appraisal ordered with Citi so we can finally get some response on our offer. (Citi doesn’t even look at an offer until they have an independent appraisal completed.)

Still waiting to receive the loan funds from the arrangement with my private lender but that should close by next week, hopefully.

Things are looking good. Still hate short sales though. I could have already completed a rehab in the time it has taken for them just to look at our offer. Useful experience though.

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Posted by on April 6, 2011 in Uncategorized


Surprise…. it’s a bloated balance, then a lien! Doh!

Since bringing in the realtor on the Vassar short sale, things have been going a little smoother, process-wise at least. She’s done short sales before so she knows the ropes; but some recent highs and lows now threaten the textbook short sale deal I was going for.

First, after about a week with the new realtor, she called me and said the balance was lower than I thought. She said she called Citi to verify the balance and was told it was only $33K, much lower than my estimate of $53K. She suggested we just drop the short sale and do a straight purchase since this balance wasn’t much higher than my original offer. I tentatively agreed, although I was still a bit skeptical. I told her to first confirm and get it in writing before we drop the short sale. The next day she called and had quite a bomb. The payoff was not $53K as I suspected; it was $60K! (Apparently the different depts at Citi don’t communicate until a payoff is requested). So now we are back to square one with the short sale. With a higher balance though, the bank may want more to mitigate their loss.

A week later, the realtor called with more news (notice I did not say “good”). The initial title search revealed three liens. One is a lien that was apparently discharged in a bankruptcy. We need the seller to find the release paperwork to clear this one. The second one shares the same name as the seller although it’s pretty obvious it is someone else so that shouldn’t be a problem. The third one may just kill this deal if anything else goes wrong. It is a lien from the govt for $10K, and charging interest daily! Despite this blow, I think this deal is still kicking. I just have to adjust my offer and pay this lien at closing. Problem is that this lowers the bank’s share which makes short selling this loan even less attractive to them. We’ll just have to wait and see. At this point, I don’t have too much in this deal other than time so I have nothing to lose by pressing forward.

Wish me luck. Looks like I’ll need it to make this happen. Did I mention I hate short sales?

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Posted by on March 31, 2011 in Uncategorized


Short Sale Circus

So my blog was deactivated for about a day for linking to an external site. Sorry to anyone who received the error page. Fortunately I’m back up and running.

The short sale for the Vassar property has had a lot of ups and downs in the past two days. At one point we were going to just drop the short sale altogether because the realtor was told the balance was lower than expected. We just confirmed (because it is what I was asserting all along), that the balance is much higher.

Here are the numbers for Vassar:

After Repair Value: $80K
Repairs: $20K
Balance reported by Realtor: $30K
Actual balance: $60K!

The original principal loan amount on this house was for $35K in 1999. The current balance is $60K. Yes, that means that after 12 years of payments, they now owe almost twice the original loan amount! They have faced foreclosure a few times in the past and the accumulation of legal fees, penalties, and back taxes has amounted to about $25K. These are the kind of situations that make people just walk away from their homes – it’s just hopeless and there is little incentive to keep making those payments.

This is why short sales exist. They allow a homeowner to sell their house for less than the full balance. This way, the house can still be sold to a willing buyer and the bank can recoup some of their investment. Even this, however, is deceptive. In reality the bank has already recouped their investment through interest. In this case for example, even if the Vassar homeowners only made 80% of their payments in the past 12 years, the bank would have collected over $40K in interest payments. Anything they recoup from the existing balance now would be gravy.

Problem is that short sales are a pain. The bank wants buyers to jump through all kinds of hoops and they make the process very difficult. You also need cash. This is why it helps to have a private lender on your team. It’s really a win-win situation with a private lender: I get access to quick cash with limited hoops to jump through, and the private lender gets a great return on their money secured by real estate. (More on private lending soon.)

For now, we will proceed with the short sale and see if the bank accepts my offer or counteroffers. I also need to talk to a mortgage broker about a HUD no-seasoning non-cash out refinance program (doesn’t exactly roll off the tongue does it?).

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Posted by on March 26, 2011 in Vassar