Any creative ways around an astronomical prepayment penalty???

I have five (5) off market, "zero cash flow" CVS properties for sale. I have a hot buyer that will only purchase if the properties are delivered free and clear. The fully amortizing loan, naturally, has an EXTREMELY pricey prepayment penalty. Are there any creative solutions anyone can suggest or knows of from experience???
In Selling Property - Asked by Jordan K. - May 19, 2010
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Johanna D.
Haymarket, VA

Initiate a commercial "short sale". Contact the bank and let them know the property could go into default if they don't work with the current owner.
Sometimes you have to take the bull by the horns and shake it a little.

May 20, 2010
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Patricia S.
Orlando, FL

Hi Jordan,
I agree with what the last guy stated and I also would consider how many assets you have that they could go after if you really were to "short sale". If you don't have anything they can go after then they usually will help you more. A good real estate attorney may be able to help you as well. Some out there specialize in getting people out of these types of penalties.

Jul 7, 2010
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Elizabeth C.
Beverly Hills, CA

I have worked with a number of clients in reducing the prepay or getting them to wave it all together. If you have a number of loans from the same bank they are more likely to wave/reduce the prepay. If this happens to be the case with you, I would definately contact the bank and try to negotiate. I am not sure how much equity you have in the property, but if you are going to redeploy the money I would ask them to wave the prepay since you will be getting a new loan.
Best of luck!

Sep 14, 2010
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