The 2ND's will discount more frequently because they are typically in a situation where they will lose almost everything if the property goes to a foreclosure auction. It is your job to build a strong case (ie..providing proper documentation requested by lenders) to support a REASON they should short sale the balance. It isn't out of the normal to hear 2ND's taking .5 - .20 cents on the dollar for their positions.
Ex.. If you have a $300K second... they may accept $15 - 60K for it.
Keep in mind this. Most LARGE (anything over $100K) 2ND mortgage holders will tend to be a little stringent to strike a deal in my opinion. They tend to want 50% or more of the balance owed to them. They will discount more, but prepare to have ALL your ducks in a row when negotiating with them. Typically on big 2ND's something or someone has caused an OVERPRICED appraisal in order to achieve or create the 2ND in the first place! Especially on LARGE ones.
If you can get a good enough deal from the second discounting you MAY NOT need the 1ST to discount.
DON’T GET GREEDY!
Don't expect the 1ST to discount simply because the 2ND did it. If the numbers are there for a good deal...run with it!
Good deals come in shape and sizes. For example: In my area .70 on the dollar is a good deal.
Ex. $200,000 house can be bought for $140K... not a bad deal.
Forget about 1ST “THIS” or 2ND “THAT” and focus on what is a good deal or backend plan for selling the property for the acquisition price needed to make it happen in YOUR AREA.
So, if your area houses are $500,000 or higher. What is a good deal on a $500,000 house? $350,000 - $400,000 what???
Then start looking the 1ST and 2ND's.
If the 1ST is owed $400,000 and the 2ND owes $350,000; that would mean the property SHOULD be worth AT LEAST $750,000...correct? If you were the 2ND mortgage holder why would you discount your position to $35K?? ...unless you had an opinion of value that stated the house was really worth $550,000. Now you know that shaves about 50% off the 2ND position...correct? Not to mention other factors such as repairs, realtor fees ect.
The lenders consider discounting based on THEIR OPINION ON FILE of the value of the subject property. If you can create enough equity out of thin air from dealing with the 1ST - Phenomenal! Get'r done!
I know this is a little basic, but sometimes it helps putting this on paper and looking at it INSTEAD of just thinking about it.
I hope this helps.
Life has Ups and Downs so Enjoy the Journey, but Stay Focused on Where You Want to Go
Loss Mitigation Specialist