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Burdett Lender is Playing Hardball

I’m working with an investor on the Burdett property who is negotiating a short sale with my lender. I only have one loan on the property at 295. The property was worth about 315 when I bought it back in January of this year (2006). Now it’s appraising at 275. The appraisal was just done a couple of days ago by the lender.

So the investor submitted my short sale packet and an offer at 200,000 CASH. That’s a pretty reasonable offer for an investor – 72% of value – considering the property will need a little bit of cosmetic work, it has no garage, the area is a bit rough and the market is dropping. The investor needs to make a certain margin of profit and build in some padding for the risks. In return for a discount the investor will close quickly, as is, and pay all cash.

The lender is telling me the offer is unreasonable. The lender just brought in a new “negotiator” who wants to see the full appraised value of 275 or something close to it. The lender is also telling me I should list this property with an agent instead. The agent would list the home on the MLS and price it at 275. Then, drop the price incrementally until we get a buyer, hopefully resulting in a higher offer to the bank.

The investor says this new negotiator guy is screwing up the deal. It was going smooth and might have been accepted by the previous person, but then this new guy starts playing hardball.

But the investor tells me now to worry. He is going to submit a net sheet showing the lender their projected loss if they choose to reject the short sale. I am assuming the net sheet will itemize all the costs associated with taking the property, fixing it up, paying brokers and eventually selling it at an even bigger discount months down the road. I would like to see that net sheet when it’s ready. I’m curious. I don’t know enough right now to see who is right.

By the way I am trying to short sale the other Sacramento property via an agent. Two offers were submitted and now we’re waiting.

So what’s better…

1) List with agent and drop the price slowly and risk dealing with a flaky buyer… but possibly get the bank more money?


2) Work directly with investor who would buy quickly as-is at a deep discount… but may just walk away and leave me stranded if they don’t get their low price?

Tough decisions.

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