Chapter 13 and Short Sale (Advice Please)
A client is in Chapter 13
He wants to short sale his rental unit which is in bad condition (currently unrentable)
Comps show upgraded homes in the community as competition sold at average $115
Subject property needs $25-$30 work to bring to comp condition.
Several buyers are interested.
- Client needs to get an “Affidavit of Abandonment for Real Estate & Asset” from the bankruptcy trustee, (after he decides that he really wants to proceed with the short sale - That will be his decision after seeking legal advice)
- After the property is released by the trustee, the lender, would probably move fast to schedule a TS date.
- We would need a buyer contract ready to go
- We would need acceptance of the short sale from the lender
The question is in what sequence should we proceed?
Should we find a buyer who is willing to hang in there through the negotiation with the lender first?
Then go to the trustee to request the release?
By not getting the release first, would that give the lender more incentive to negotiate, since if it stays in Chapter 13 it can sit there for another couple years?
Or should we get the release first and then work on the short sale?
Comment
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Comment by Bill Travis on March 8, 2011 at 5:43pm
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Thanks Bryant, that sounds like a good plan.
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Comment by Bryant Tutas on March 8, 2011 at 2:40pm
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Bill. It it were me I'd work it all simultaneously. I would get a contract asap. Then submit to the BK Trustee and the lender at the same time letting each know you are dealing withhe other. Make it clear to both the anticipated closing date then just start pushing the deal.
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