Short Sales

Hi anyone that can Help,

I have after a couple of months 3 buyers some far.
And believe me it was a true blessing with a big smile to me. I have a question that maybe someone can help me in the right directions. The question that I have is that I have a buyer that what to give me a certain percentage of the deal that I bring to them. How do I get my percentage base on his word? This is a short sales deal and is it possible to get short sales under assignments?

Thank!

“Newbie first timer”

James Bowie (JB)

I'm a newbie, still just reading everything, books,& blogs. But to me so far Short Sales, surely doesn't seem like a short process,Confusing, But possibly profitable for the right person.

You dont need an agent to negotiate the shortsales. But is a good Idea to have one to find an end buyer for you.

I am renting a house which is occupied by my son and his family. It sold for $350K in 2005 and now has an estimated FMV of $140K to $160K. I have a lease contract until October of this year. The owner has decided to "short sale" the house; because they are so much under water. We already occupy the house and we would love to make an offer.

Although my wife and I earn decent monies, our credit scores are not high and we do not have money for a down payment; because we have a second home. Do I need a down payment or a pre-approval before I can make an offer? My guess is that the owner is not making mortgage payments currently. The rental amount I currently pay could go towards a mortgage;; if I had 20% down.

There seems to be a great opportunity here; but I don't know how to go about this. Can anybody provide me with some advice?

Tom in Florida

Hi Tom,
I do short sales and it sounds as if the owner of this property is not making the payments or feels that the value of the property is really sinking.
When making an offer as we do on short sales you will need a few pieces of information to make a fair offer to the lender i.e...the balance of the mortgage, if this owner is behind and by how much? Comps in the area. Who the lender is? Is this property listed on the market yet? There is so much that goes into a short sale package for the lender. When making an offer to the lender we always send in a Proof of Funds along with our cash offer.
This is just touching the tip of the iceberg. There are many components to a short sale. But you can get some great deals.
If you need any other help let me know.
Myself and my partner do short sales nationwide and have done them in Florida.
You can check out a deal that I shared on the DG forum titled-- Closed Another Short Sale Friday!

Laura
www.bmwinvestproperties.com

Laura;

The owner has engaged a realtor. Am I obligated to work through him or can I continue to speak with the owner that I've gotten to know real well the past 2 years? Also, a co-worker of mine owns a home on 2 acres. She is current with her mortgage, although the home is worth much less now than when she purchased it. The area she lives in has received national publicity recently due to a large number of brain tumors among children living in the area. She wants to obtain a new mortgage on a different home, move, then short sell her home. Is this kosher? I think she might be geting some bad advice on how to do this. She is still young and I'd hate to see her do something that might cause her any pain. Thanks for your advice.

Tom

Tom,
The realtor can help you get the things together for a short sale and put your offer in. Is this realtor doing a short sale for the owner?
When we do a short sale we handle everything for the A-B transaction with us and the lender and homeowner. What is the home being listed for?
Where is this property located at? Do you know what is owed on the property?
About your co-worker, where is this property located at? I will tell you that a lot of homeowners we have come in contact with will go find another house and then do a short sale. The lender will take all of this in consideration when they are negotiating the short sale. And remember with a short sale there has to be an offer with the package before the lender will look at it. And if this area is considered undesirable then she may not get any offers so she may lose the house to a foreclosure. But everyone needs a place to live. And since she is current on her own payments she will not be considered for a short sale until she is behind usually.
Laura

Hi everyone, I have a buyer who says he only works with short sales. Now is it possible to do assignment deals with short sales? I don't know whether he qualifies for my list. If so, am I asking the same questions as normal buyers (area, type, profit, etc)?. Also I wouldn't be asking how much equity b/c I thought in a short sale the owner is upside-down. Looking forward to replies. God bless.!!

Deshone

I'm having some touble and need some advice to get over a particular obsticle. Right now I have found a property that I really want to invest in. Personally I cant get a mortgage because I am a student, however I am trying to set up this deal in which my brother would be the primary investor. His credit rating is not good, infact, it is considered poor at a 575. I pulled his credit report and he only owes on his current car which is like $18000 he just got it in like Nov 09. The property is a condo and the asking price is $35000. Its current apprasial value is $84,154 assessed at $58,910 according to city assesors website, which seems like a good deal. It is located the struggling city of Waterbury ct, however, is in a decent up kept neighboorhood. I have spoken to a gentelemen from Amerasave or something of the sort(quoted online) and he told me that lenders have a requirement that they are not able to loan under the amount of $50,000. Is this true? I thought about the option of harding money lending but the percentage rates are ridiculus for those who are looking to hold on to properties (12% annually). Also, he is in the military and active, so I inquired about a va loan but he's stationed in oklahoma so they will not approve it because it's not his primary residence. Also we have a vacant lot appraised at $16,000 in the same city, I would really like to purchase this condo what can I do. Can I borrow aganst vacant land? I have about $7,000 in cash to invest for closing misc. expenses. should I contact the seller and lender and try to lock in a deal or should I aquire the financial pre-approval first. Also, I forgot to mention it was advertised as a short sale.

Just curious, did the short sale ever go through? How much profit did you make if it did?

Hi guys, I'm new to the website and had a few questions about short sales. I currently have a 3bedroom 2 bathroom condo I'm short selling. Approximate sq ft is 1800. Newly constructed back in 2005. Stainless steel appliances. Washer & dryer unit. Overall move in ready with nothing wrong. I just couldn't keep up with the payments. The condo is worth anywhere from 218K to 299K base off Zillow.com. I have a buyer that put in an offer for 55K. I guess my question would be, as the owner, is there anyway I can make some money off this deal?

Thanks in advance.

you are not allowed to profit off of a short sale if you are the owner. This is considered illegal.

I just listed my property with R Agent they will negotiate with the bank. I have investor interested but needs more time to file 2009 taxes. I would like him to be able to purchase this property deserves it. My question is will his offer be considered first since he will be the first to make offer? I also was told several calls to view and make offer have been summited. Who gets the property highest bidder/first offer?

I currently have a family member doing a short sale. They have a $200,000 mortgage and asking in the SS for $49,000. My questions is how does this process work better for them versus a foreclosure? Do they have to cough up the rest of the money that they owe on the mortgage loan if doing the SS? As for the buyer, say the buyer offers the $49,000 does he get the property free and clear for that price or do they still have to negotiate a price on the remaining $151,000 of the loan. What if the owner of the loan doesn't have any money at all to put in for the short sale? Any information will help me to understand this more clearly. Thank YOU.

Jose

I'm in a situation right now myself and it involves my landlord losing this house to forclosure. There is alot involved and the person he bought the house from is in prison for real estate fraud right now. What led to the problem was there is a one bedroom guest house in the back that the bank has already forclosed and evicted the tenants who stayed there. My landlord thought both houses were included in the deal and feels he paid way to much for the property to begin with. Now he has stopped making payment on the 3 bedroom house in front. I'm sure its in preforclosure now. I hate to see him get a bad mark on his credit due to this because he is a cash buyer. I'd like to be the one to save this rental house be the one to find him a stream of profitable deals in the near future. Due to the circumstances is it possible to do a short sale with him as a buyer? The house in back is being sold for 14,000 and I don't think it will sell for more than 4,000. I think I'll do some investigating before it's to late maybe I can help my landlord and the bank agree on another solution. It seems a little messy. Any input DG friends.

I was reading an article concerning short sale fraud. The rest of the article detailed scenarios and red flag for short payoff fraud. The scenario revolved around a short sale facilitator who set up a deal with a lender to purchase a home worth 80K for 70K while the lender took a 30K loss. The facilitator does not let the bank know that he already has a buyer ready to pay 95,000 for the property. When both transactions close and the facilitator pockets his profit, Freddie Mac consider him to have committed fraud since Freddie Mac has now taken a larger than necessary loss on the sale. This was May 12,2010 press release by Freddie Mac. Can someone be more clear about these types of deal because these deal are being red flag by Freddie Mac as short sale fraud.

I would suggest you read attorney Ron Ballard's response to the Freddie Mac article.

Check out this blog for more information on Ballard and his free resource for short sale investors.

http://realestateinvestorwebsites.blogspot.com/2010/05/attention-califor...

in plain terms a "Short Sale" is when the bank agress to take less for the property than what is owed on it. ie: short the loan, short means the bank agrees to take lessmoney for the original loan then what the homeowner owes on the loan.
Homeowner owes $100,000.00 bank takes $75,000. to satisfy the loan. The bank then writes off or forgives the $25,000.00 they are not getting. However, the lender could come back on the homeowner and ask them to sign a note for some or all of the $25,000. or go after the homeowner for the $25,000. deficiency. The homeowner will get a 1099C at the end of the year which is considered INCOME by the IRS and taxed accordingly. However, in my state, and I don't know about others the Government did some legislation that says from 2007 through 2012 the lender can NOT come back on the homeowner for the defiency ($25,000) Some deficiencies can be a little or they can be as much as a couple of Million dollars.
I hope this helps
Diana

I have seen short sales take up tp 5 months, so be patient on them.

Hi,
I appreciate your input on the short sale process. I currently have a ton of short sales and bank REO's in my area that I have looked at and am considering making offers on. However, I wanted to know if anyone has ever seen a reassignment on a short sale or on an offer to a bank? Is this something the bank will even consider in either situation? I appreciate your input in advance.

Thank you for your insight on Short-Sales. I'm currently doing one and it's been an interesting task to take on. I've found that alot of the time taken in the process was to get all information from the owner to get to the next steps of speaking with the lender. This is my first one and now I'm taking good notes so the next on is a breeze.

I have just received and started to read Dean's books.

With the market as low as it is...and thinking it will get worse before it gets better, my wife and I want to put our home on the market, take a small hit now & find a great deal on a nicer, larger home as an investment.

I have found a short sale that is soon to go into foreclosure. The Realtor is telling us "the seller as well as the bank wants anyone to just make an offer".

I think this could be an awesome deal, but how do I take advantage of this while I'm still holding my current home...and cannot afford two mortgages until it sells?

Also, are there any red flags or deal breakers associated with short sales?

Any advise is greatly welcome!! Thanks

Hi DG Family,
I wanted to ask some advice on short sales. I tried to put an offer in on a short sale. It was listed at 80K. Talked directly with the listing agent. It needs under 1K in work. 2 identical homes in the tract have sold in the last 3 months (one was a few weeks ago) on almost the same lot size for 105K and 121K.

Offered 85K, 5K earnest money, contingent upon seeing the property, 70K of monies to go directly into escrow upon all contingency removals, and it was being bought in a trust because he is a general contractor and apparently a general contractor can't do an LLC. (Anyone in construction in CA, can you verify this?). Also, any amount in closing costs and price, we asked for the bank to do the financing for 5 years at 3.5% (so they're still making some money on a loan).

The agent came back and said the seller is looking to get at least 100K. Basically, they listed it low to try to get a bidding war going. Agent says someone has 100K offer in now (this was a couple of days later).

He will not submit my offer; nor will he put it in backup status. It doesn't show pending yet. Doesn't an agent have a fiduciary duty to present all offers to the seller? Is this normal for a short sale? (Really, is there ever anything normal about short sales? LOL)

Anyhow, this was a deal that was for a close friend of ours, buying his first house. I really want to go gusto and get him a good deal and would like any and all advice possible on how to tackle the listed short sale properties with the realtors. MOST of the houses he's interested in are short sales. There are a few pre foreclosures I've found fitting his criteria as well, and it would be the same thing on most of them; most will be short sales.

Wanting to get a post up for this particular instance, and thought I'd ask a few other questions along with it to get a good archive going.

Also, I'm writing the trust up for him, and have it complete; except for the property it will hold, and putting it into the computer (computer problems). I will be the trustee and put a compensation in the trustee of $1K for me to be the trustee to make it count as a deal. (although, I won't really take money from him, he's doing a lot of work for us for free Smiling ) I'm then going to resign as trustee so the successor trustee can resume responsibilities. (2 successors being appointed for this reason Eye-wink. This gives me the power to put the contract together and do all the signing. (First one will be checked by a lawyer after I write it, but after that, I'm putting EVERYTHING I own in trusts! What AMAZING benefits!) After what I learned, I know it is the only way to take title, even on rehabs! (And I got this as a part of an extensive RE program at a garage sale for $20!!!!) (Retails for $9.5K!)
_______________________________________________________________________
Why does it seem like all the agents I run across for the houses I'm interested in are like the agents in the Matrix. Oh Mister Smiiiiittthhhh.

Can I try faxing it directly to the lender? I was the first one to make an offer and it didn't get submitted.

Can I request a general short sale package directly from the lender not specifying an address and send my offer directly to the bank? I'm trying to think outside the box, but realize I wouldn't have the hardship letter. How do I let the bank know the agent won't submit my offer?

I've read the whole shortsale thread (Awesome info, Can anyone help?

have an answer to my ?s? THanks in advance!

bump

I am also a Short Sale Listing Agent with many successful closings. Not quite as many as you. As you know, the short sale process begins when an offer accepted by the seller is presented to the short sale lienholder/bank. When the bank approves the short sale, their is usually a clause stating that no substitution of buyer or seller is allowed. (Basically an Assignment of contract).Review some of your past approval letters. So, reassignment of the short sale contract doesn't appear doable.

This is how I accomplish more income from short sales. I represent both the buyer & seller/investor in a short sale transaction. I then represent the Investor/Seller in re-selling the property & most times the buyer. In California where I live,as long as all parties agree, it is legal. I negotiate 6% from the lienholder bank. 90% of the time I receive it.

Be Blessed!!
Mark 9:23 "Everything Is Possible for Him Who Believes"

In reply to Zion Properties,

Hello,

You're right about the Realtor having a duty to present ANY and ALL offers to the seller. In the end, it is not the sellers asking price that determines the selling price anyway. As an investor, I'm just getting a really good start with short sales but have learned a lot about them. For instance, (nothing against realtors) but I would never, ever, ever, let a realtor do any negotiations for me. There are some out there that actually understand things from an investor point of view and are great to work with, but I still have my own negotiator. Most took a 12 hour crash course and are now Short Sale Specialists.

I try to work direct with a motivated seller and don't even enter a purchase price on the contract. In that space it reads "(TBD) To be determined upon lender approval." What the seller wants out of it doesn't matter, it's what the bank wants for it, and they will decide regardless what the seller thinks. The bank will order a BPO, and then the negotiations will begin from there.

In your scenario, the seller (more like the realtor) wants 100k. If you offered 50k, and it was submitted to the lender as it should have been, the lender would've said "no thanks" but lets order a BPO and see if we can settle on a price. Let's say the BPO came in at 90k. Most banks will accept 72-80% of the BPO pricing, many times less depending on how much work needs done, comps, etc. If you were able to get it at 75% of BPO, it would've cost you 67.5k. The homeowner would've avoided foreclosure, and your friend would've got a hell of a deal. IMO, most realtors are still not sure how to work short sales, and unfortunately they hold out for top dollar only to put the seller into foreclosure in the end.

Not sure if this helped any, but thanks for listening.

Kyle

Thanks for the wonderful info,
Its listed with a realtor, how do I put in the contract I want my own negotiator to deal with the bank direct and not the listing realtor?

I would write up a purchase agreement with the negotiations as a contingency and the TBD in the purchase price, or a very low offer just to get the process started. It doesn't matter if you offer $5,000. They just need an offer to order the BPO and start negotiations from there. Reassure the agent that they will still receive all their comission in the transaction and will not be removed from the sale, they just won't handle the negotiations.

I have a friend that has even had the seller sign off that they reviewed the offer and either accepted or rejected it, to insure that the realtor has indeed presented the offer.

I can recommend an awesome negotiator. He has successfully negotiated over 2,000 short sales with around a 95% success rate. He's awesome at what he does and can answer any additional questions you might have.

Kyle

WHERE SHOULD I START FIRST? I HAVE NOT REC'D MY BOOKS YET.