Wednesday, April 29 2009
One of the latest deals I put together was for a lady in Missouri that involved a short sale. She submitted a bid request on an '06 motorhome a couple of weeks ago. After receiving the bid, we sent a dealer alert to our participating dealers and within 48 hours I had all the bids in and gave her a call. The highest bid came in at $65,000.
She explained there was no way she would be able to accept the bid because they owed $153,000 on it and their only choice was going to lead to letting the bank take the unit back. That's when I explained the short sale process and encouraged her to call her bank to see if they would be interested in working out a deal with her.
A short sale by loose definition is when a lender forgives a portion of what is owed on the unit and allows it to be sold for a lower amount.
She said she'd give it a shot and called me back a day later. The good news was, the bank was willing to work out a short sale with her. The not so great news was that they wanted $75,000 instead of the high bid of $65,000. I got back on the phone with my high bidder and told him the scenario. He agreed to purchase the unit for $70,000 but said the seller would have to come up with the remaining $5,000.
Needless to say, the owner was relieved! She agreed to pay the additional $5,000 and within 4 days later the unit was picked up and money had changed hands.
Her payments (I'm guessing) were probably around $1,500/month. That's alot of dough if you've fallen on hard times! Granted, she had to fork out the remaining $5,000 but what she doesn't have to do now is face a judgement of the difference between what she owed and what the bank would've sold the unit for. Now she'll only have to pay taxes on the difference between the $75,000 and the $153,000 she owed. That's a considerable difference come tax time!
Short sales are starting to catch on in the motorhome industry. We're working on 3 more as I type. While not every bank is interested in cutting a deal like the one above, some banks are. We think it might have something to do with the banks that have received stimulus money but I'm sure the determination is really handled on a case by case basis.
If you find yourself in a similar situation, it might be worth a call to your lender to see if you can negotiate a short sale scenario. You might find yourself as relieved as one of our latest customers in Missouri.
Catch ya later!