Short Sales

I went to a day-long seminar put on by my local REI club last weekend and got this helpful tidbit in successfully negotiating the short sale process. If you're already aware of this, I apologize...

Often a big part of the difficulty in agreeing on a price with the lender is that the broker/RE agent they send out to the property to get a BPO (Broker's Price Option) frequently jack up the estimated price/value of the property because they want the listing and erroneously assume that the bank wants to see a higher value and also they'd get a higher commission on it, once sold.

So, the investor who was speaking to us said he puts HIS realtor's name and contact info on the package that's submitted to the bank/lender so when they call to set up a time to go and assess the property, the investor's realtor goes and meets that broker at the property and shows them a complete assembled package that they have already put together with the lowest justifiable price they deem the property to be worth. He said in his experience, the lender's agent, when offered this package, will take it to use as their BPO about 50-60% of the time. The benefit being that the numbers the bank is looking at will be closer to what you (the short-sale investor) is offering for the property and will save time with negotiating the final accepted price.

Hope that was helpful...

Suzi

I just went to a REI mtg. last night where this very topic came up and there was a gentleman who is very knowledgable about short sales and the current process and he said this..."Most banks/lenders now will not even look at a short sale package on a property without having that property listed." He also said that it can be more of a formality and if you have a RE agent that you've got on your "REI team" that they can simply list the property on the MLS knowing it's more for the purpose of "checking off that box" with the bank than actually a regular listing.

It was also suggested to me that you fax your short sale package, as opposed to mailing it. He said in most cases, the banks are bombarded with ss packages that are mailed in and if it's faxed, you have a better chance of it being looked at immediately rather than tossed in an "in box" with all the others.

Lastly, make sure you put the properties loan number on EVERY page since that's a common way that things get delayed when one piece of paper gets "lost" because it isn't easily identified with a particular property. Then you have to send it in again and so on...

Hope that helps some...good luck!!
Suzi

Hey i my name is anthony and i am from chicago illinois and i was just wondering how much should i charge for a finder's fee.

Hello,
I am a newbie here - I didn't even think I was ready to start looking seriously into my first deal yet, but I've stumbled upon this Short Sale in my neighborhood that seems to be a great opportunity. But I have so many questions and hope someone with experience in short sales can help!

SOOO - The house I am looking at is 3bd 2bth with a list price of $299K, however i believe the FMV is more like $250K...I want to put in an offer for $150K or less(and hold on to it as a rental prop.) Do you think this is a realistic number? I can vouch for about $50K in needed repairs, but how can I justify that I am also trying to get (as Dean explains) 30-50% off FMV??

Secondly, is it at all possible to have them pay closing costs or have them add it back into the loan so we do not have to come out of pocket a great amount? Is there any way to get cash back on a short sale, just in case we cannot get renters right away or there is a gap in renters? (unfortunately we would not have the funds to cover that.)

And finally, I've heard that the regulations on short sales are changing to make them an easier and faster process...Has anyone heard anything about this??

Any and all feedback would be GREATLY appreciated!!

Thanks a bunch!
Santa Carruth

Hello Bailey,
I AM INSPIRED BY OUR ACCOMPLISHMENTS. I AM ALSO LOOKING INTO DOING SOME SHORT SALE DEAL AS WELL AND I MAY NEED YOUR ASSISTANCE IF THAT IS OK WITH YOU DUE TO YOU HAVING THE EXPERIENCE IN THE SHORT SALE INDUSTRY. I LIVE IN NY AND WOULD LIKE TO PURCHASE A PROPERTY OR 2 ON A SHORT SALE TERM. IF U CAN GIVE ME SOME INFO ON SOME SHORT SALE DEAL LOCATED IN BROOKLYN I WOULD REALLY APPRECIATE IT THANK U

I found a property that I would like to do a Short sale on. I ran the numbers and I would like to wholesale this property to a qualified buyer/investor and take a cut for myself. I would like to put in an offer but dont have any Proof of Funds to show the bank that I can purchase the property in my name. What's my next step? I also dont have a buyer yet. When I do find a buyer, how do I go about applying their funds in my name? This is the part of the Shortsale and assignment process that Im not clear on. Lastly, Should I wait to contract with a buyer fist before I submit an offer to the seller on the property? and what contracts should I use to make this scenario work? Thanks DG Family

I have a friend who is going thru some hardship and she is being foreclosed upon. She bought a condo conversion a few years back for around 139,000.00. Now i know that this property is not worth that. They also have converted them back to apartments since they were not able to sell the majority of them. I would like to know how I can purchase this property on a short sale and maybe rent it myself. What would be the first step I need to take to get the process started...

Hi There:

Has anyone found a sure way of reducing the time it takes
to muddle through the waiting process of a short sale? Sure
does take a long time, wondering if someone has better contacts
from working them a few times.

Thanx!

I just got to read your post and love it. You finally put it together for me. Because I was thinking liked you're thinking. I am working with a decent agent, she send me a list of all the short sales properties of my area among VA, Foreclosures and REO's. I have been putting couple of Dean strategies together and I am working on couple of assigments. But I was thinking that we could interface assignments with Short Sales and about anything else.

Again Thanks for your input,

max

Hi Bailey, my broker sent me short sale listings and I have a few questions:

1. Is the listing price already the price for ALL MORTGAGES in the property (2nd mortgage, HELOC, etc)?
2. What percentage below the asking price should I offer?
3. What % below the asking is usually accepted?

Thanks and any guidance would help.

At times I just don't get why so many people are into short sales.

Plus I think REO's are better.

I am working on my first shortsale, but I am so confuse. After talking to my RE agent, she even get me more confuse.
Here's the scenario please give me some guidance:
I have the home owner all paperwork, he owes 365k on the mortgage but when I look on Realtytrac the property value is 311K, is that the value to offer the bank for it?
What arrangement should i make with RE agent about commission?
Should I let her does the short sale or I do it myself?
The agent gave some of her shortsale package form, should I used her form or I can buy mine off the internet?
Anyone experience with HomeEq loss mitigation dept?
Anything I can do to maximize my profit?
Should I give the home owner some of the profit.
Thanks for any help!!!

My question is, If you have closed on a property and the closing did not go well, the title company charged very high fees and the end buyers lender on the short sale said that they are filing a complaint, can your closing be reclosed with another title company after the fact if all parties are in agreement?

Thank you in advance.

A Short Sale is simply a mortgage that the lender will discount, (take less than what the homeowner owes). The bank is never the 3rd party. They are the main lien holder. You are the 3rd party if you are negotiating a short sale for the homeowner with the bank.

Hope that helps!!

Unless it's FHA, then homeowner can get back a small amount ($1kish)

Just now learning about short sales. Any suggestions on how to put together an offer for a short sale? What are the important steps in coming up with a price to offer the bank? Any thoughts would be great.

Thanks.

If your lucky. Still worth it

Banks base their approvals on market value of the home usually seeking to NET 80-90% of market value depending on the lender. If you write your offer too low they will ignore it and it will be bogged down in their system. The best way to maximize your profit is to influence their "broker's price opinion". An experienced realtor can help you with that. I would let an experienced realtor or short sale negotiating company handle the negotiation unless you are familiar with the process. To do it yourself, the seller will have to sign an authorization form for you to talk to the lender. Realtors usually ask for their 6% which is paid completely by the SELLER in a short sale. Sometimes the banks cap how much can be paid in commission (5%). You might want to discuss keeping commission from blocking the transaction if the bank is looking for a certain net and commission is preventing the bank from getting that net. Don't know what forms you would need from the realtor as a buyer unless there are disclosures related to the short sale or unless the realtor already uses a short sale negotiation team. These teams charge several thousand dollars to the seller/lender to negotiate and if they can't get it from the lender, they charge the buyer as closing costs.

it is illegal to charge the seller a fee unless it is being handled by an attorney's office. An investor negotiating the SS gets paid from the sale of the property.

Lea
SPR Property Solutions, LLC

MVasquez,
Thanks, the steps were very helpful. I am creating my own diary of short sale info. and the steps topped it off.

Thanks to all on the short sale info. I have "negative equity" in my home. Now, with this info., I have a better understanding of short sale and another option available to me. thanks all....

BaileyMedows,
All I can say is "wow." You too have made a "believer." thanks...

Thanks

when a mortgage holder agrees to accept less then the outstanding mortgage balance , it is called a short sale.

my realtor and I , are assisting a buyer (friend) in finding a two family home in my area. What contract would I use for a REO deal and make money on the closing?

I wanted to know if you actually need a realtor too do a shortsale or can you do it yourself and just find the buyer? Please respond thanks!

I wanted to know if you actually need a realtor too do a shortsale or can you do it yourself and just find the buyer? Please respond thanks!

In order to do a shortsale do you need a real estate agent involved or can you just do it yourself and and find the buyer to make your commission?