I'm looking at a pre-foreclosure with a first and second mortgage. I understand the second mortgage bank will

Asked by Holly C, 33406 Sat May 3, 2008

take a deep discount to avoid a total loss. What would be a good percentage of the loan balance to consider offering for starters? I'm told as low as 10%.... would that ever be accepted?

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Javier Olmedo, Agent, Miami, FL
Sat Aug 23, 2008

There is a fcator that you have yet to consider, and that is what is owed vs what the value is. If the previous owner bought it high or refinanced at the top of the market, then even a deal on that house may not be the best b/c they owe so much. i would start with talking to a Realtor and figuring out what the value is now and then offering a percentage of that total.

Hope this helps,

Javier Olmedo, ABR, GRI
Florida Realty of Miami
Web Reference:  http://www.olmedohomes.com
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The Hagley G…, Agent, Pleasanton, CA
Sat Jul 26, 2008
The lender will want close to market value. Often pre-forclosures have tax liens, HOA liens, and other liens against them. Banks will let a home go to foreclosure rather than take a deep discount. AND...the second lender always has to sign off on the deal - so if the offer is low, it won't fly on either side.
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Steven P Wood, , Jupiter, FL
Sat Jul 26, 2008
Hi Holly,

Using the amount of the 1st or the 2nd mortgage will not be a good way to determine what to offer.

The important number is Market Value.

For example, if there is a 1st mortgage of $250,000.00 and a 2nd mortgage of $50,000.00 on the property, and the Market Value of the property is $300,000.00, then do not expect the 2nd mortgage lender to turnover the 2nd mortgage at a huge discount.

On the other hand, if there is a 1st mortgage of $250,000.00 and a 2nd mortgage of $50,000.00 on the property, and the Market Value of the property is $225,000.00, then do expect the 2nd mortgage to accept $2,000.00 to $3,000.00 to have the 2nd mortgage remove the 2nd Mortgage Lien off the property.

The mortgage companies will get Appraisals on the properties to detemine Market Value.

Can you figure the reason why the 2nd mortgage will accept such a low amount?

The next step is to determine how much to offer on Market Value.

And that is determined on how much you, and everybody else, wants that particular property.

If you think that you are the only one that wants the property, then put in a bid around 5% to 10% less than the Market Value. If you think that others want that property more than you do, be sure to out bid them, and that means bidding more than Market Value.

I hope this helps,,,


Steven P. Wood, Realtor
Palm Coast Realty, Inc,
12300 Alt. A1A, Suite 209A
Palm Beach Gardens, FL 33410

Direct: 1-800-298-2566

eMail: Steven_P_Wood@msn.com


Office: 1-800-298-2566
Fax: 561-625-0086
Cell: 703-851-6535

I am at Your Service for ALL of Your Real Estate Needs, Specializing in Jupiter, Juno Beach, Tequesta and Palm Beach Gardens !!!
Web Reference:  http://www.ByJoveMyHome.com
0 votes
Matthew J Bl…, , 33410
Sun May 4, 2008
Holly, Phil really gave you some good advice. The lenders who hold the second DO Not have to go along. I have seen them hold out. Please don't assume anything in this market. If the property really does not matter that much to you than I would go along with what Phil told you and see what happends but don't be surprised if they say NO.
0 votes
Phil Fowler, Agent, Brandon, FL
Sun May 4, 2008
Hello Holly,

Keep in mind that the lender will hold out for the best offer and that your offer may be competing with others. Will it matter if you lose this property to a better offer? If it doesn't matter to you, then make a lowball offer.

Be prepared also to wait a long time for your anwer, which could be one of three.
1. Yes
2. No
3. Counter

Web Reference:  http://www.PhilFowler.com
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