Short Sales

Bailey Meadow you have a lot of knowledge on this so ill ask you.

In a short sale do we need to pay counting from where the tenant owes the lien holder or do we have to pay the full price of the property

Example. My friend owns a home worth $400,000 and he has already paid $100,000. He is 3 month behind on his mortgage and his is afraid he’ll lose the house in a foreclosure. Do I make my offer around the $275,000 or around the $375,000.?

Also do making a short sale affect my friends credit in anyway??

Akator first think about what you plan to do or how you plan on exiting the deal. Or you going to keep it to live in by getting a loan on it or are you going to rent it or flip for a profit?

If you are going to purchase to live in then you may want to offer %80, %70 or even %60 percent of current market value. Just depends on what you can and willing to pay.

If however you want to sell for a profit, find out what the 7 day quick sell price is or what a investor is willing to pay for it.

A good rule of thum when making offers would be %65 to %70 of the ARV or After Repaired Value, minus fix up cost, minus your desired profit.

I believe Dean suggest making a %50 offer of the current market value. This is what I'm offering on short sales in my area. You can always go up from here.

Hope this helps!

Rodney

I am currently looking at a short sale that has been listed for close to 2 months.
The listing price started at 139K, then went to 129K after 2 weeks, now is at 119K. Last price drop was 1 month ago. Wondering if this is a situation where there getting no offers and I can really lowball them or are they trying to attract more bids.

Thanks wolram

Since it is a short sale, don't you need the owners permission for the price you want to pay? When or if they agree thats when you can make the proposal to the bank, is that correct? I only thought this because in actuality they are still the owners of the home until the property goes into foreclosure. So they do have a say right, or can you go around them and buy the property?

No you can not go around them, They can cure the problem right up untill the bidding starts at the court house steps if they walk in with a cashiers check.

Hello, the bank approved this 4000 square foot house for a certain amount. Can I get the owner to do a Quit Claim Deed over to me and record it and then sell it or I live in it myself?

There is a attorney, realestate investor advertiseing on the net about going partners with you, where you are charged nothing until a deal closes. You bring them the short sale and his team does the negotiateing and somehow when the deal closes and is resold you split the profits. Does this sound right etc? Has anyone heard of this and if so does it sound good to anyone.. Fran

I am involved in my first foreclosure as a novice investor. I have a good grasp on most everything with the exception of how I represent the purchase funding of the discounted property to the lender if I am planning on funding via sale of the property through a simultaneous closing? Are lenders or banks generally flexible and understand this procedure or do they frown upon it and lean towards hard cash at sale?

I am an Asst VP of Short Sale Mitigation for one of the Largest Banks here in the US. The bank does not have to approve at all. There a several determining factors. First, is the current loan the property a non-delegated or fully delegated loan? If the servicer is not fully delegated then the bank that is servicing it doesn't make the final decision at all. The investor does. Also if there was PMI on the file then there must be an approval from them. Its not as simple as most people think but it can be profitable for those who endure and dont walk away because its taking 3 to 5 months or more. Case in point we have approved sales of houses in a particular market that I wont post here that had mortgage balances of 175K for a sale price of 6k to 11k. THAT IS NOT THE NORM! But if you know your markets you can get a good deal. A good deal is 85% and below FMV. Doesnt matter if the amount owed is 400k. If the FMV is 200K the house wont sell for anymore than that. If you can get it at 85% of that, its a good deal.

Can someone please post or PM me the Authorization to Release Form Please. I need this for a shortsale I'm working on.

This is the form I use. Sometimes the bank has their own form but this almost always works. Good luck!

** Authorization XXXX LLC and/or Attorney XXXXX, Esq. to communicate with creditors, collection agencies, and counsel of Record**

Borrower:
SSN:
Address:

Lender:
Loan Number:
Property Address:
The undersigned client has elected to retain XXXXX LLC and the Law Offices XXXXXXX to represent him/her in matters related to the loss mitigation process and/or any judicial foreclosure proceedings brought against client and/or client’s property, and hereby authorizes XXXX LLC and/or The Law Offices of XXXXX to communicate with banks, creditors, financial institutions, licensed collection agencies, counsel of record, and all other entities and individuals to the extent that such communication is necessary to advance the objectives of such representation, on client’s behalf.

This Authorization consists of one (1) page and shall remain in full force and effect until client’s representation by XXXX LLC or The Law Offices of XXXXXX expires.

Client: _________________________ ______ Date: _________________
NAME

Client: _______________________________ Date: ___________________
NAME

This form may be duplicated for multiple lenders and may be FAXed or emailed with full force and effect.

can a short sale be assigned, and also can it be done while in foreclosure process? If so, what is sequence of actions?

Hello every one i reed the book ,i did my first deal in the middle of reading the book i got really motivated, but now i found two short sales that I want to place an offer but how can i start the deal what forms to present to the bank since i want to get this properties for other people. Any help ...
Thank you and have a beautiful day.
Victor

look at post#255 (authorization form) you need to have homeowner fill out and send to bank, otherwise the bank won't even talk to you about the property.

The bank will send out an appraiser to get a value for the property and then they will let you know how much they want for the short sale; the investor (could be Fannie Mae, Freddie Mac, or a PMI company) have to approve the shortsale, then the bank may accept your offer. You may not be able to counteroffer if you cannot substantiate your offer against their appraisal.

Wishing you success,

Valerie

For five years I tried to get a loan modification with no luck,
after $4,500 on lawyers.

So gave up to let the foreclosure go through, and the house is scheduled for auction August 5.

My new lawyer just told me that a short sale is less harmful to your credit.
However, they just discovered that Fannie Mae requires 14 day notice to
approve a short sale.

I'm going to an apartment for six months. And the trees can all die.

Hello,

Do you know who to do a short sale transaction w/ re-assignment?

Best,
Kyler

Hi, Where would I find a short sale a Short Sale Addendum - disclosure form that tells about the short sale transaction?

Hi, where would I find a 3rd Party Letter of Authorization (LOA) form at and is it impossible for someone to complete the process without an agent.

Thanks for that letter sample!!!!

I was told by a real estate agent that the process of IEE, Assignent, and Short Sale Deals where we receive comprehension is illegal. He said that I will be visited buy the real estate commission. Can anyone explain?

Especially in today's economy, He said real estate agents once they heard about my deals,they will probably report me. He said this is a dangerous strategy. Anyone care to explain?

you are not receiving a commission, because you are not selling a property. You are assigning a contract, which is legal. You are getting paid a fee for relinquishing your rights to a contract.
You will not be visisted by the real estate commissioner unless you are a licensed real estate agent and are carrying out unethical activities. Many real estate agents do not like investors because we are competition.

wishing you success,

Valerie

It just takes time... Be prepared when you you contact the bank. Have the package prepared to send in the day you contact the bank. Items needed from the owner:
1. Two months of bank statements
2. Two most recent pay stubs - if self employed 6 months of profit and loss statements.
3. Two years of tax statements
4. Financial statements - detailing all expenses and income of borrowers.
5 Hardship letter -"sympathy" letter explaining the events that leadd to the inability to continue to pay your mortgage.
6. Authorization letter - gives bank permission to discuss and negotiate short sale offer with investor

Items need from the investor:
1. Listing agreement - if listed by a Realtor
2. Purchase and sale agreement - "your offer" low offer, starts the process
3. Estimated HUD 1 - build a relationship with local Title company or real estate attorney who can prepare this for you.

Call the bank to contact information for their short sale department, fax all the information in and wait out the time. It is a lengthy process, although it helps to have all the forms from together from the very beginning. This is where a real estate agent can help if they are familiar with short sales, find the property and let them gather the information and work the deal, while the contract is in your name and/or assigns...

Ok, thanks for the information. Another question, Does the owner have pay the difference when the short sale closes. Example, if I find a seller whose house is or may be going into foreclosure and they owe 70,000 to the bank. The house is worth 50 to 60 FMV. I put in an offer of 45,000 for a short sale and it is excepted. Does the seller have to pay the difference of 70 and 45 back to the bank. And where would my fee come from.

Thanks, I am just trying to get a complete understanding of the process

Does any one know what kind of forms I need to put in the Short Sale package, that doesn't allow the bank to come back and sue the seller for the gap. Example: if the seller owes 70,000 to the bank and the bank accepts a offer of 30,000. I need a form or contingency that will keep the bank from coming back later and trying to get the 40,000 difference.

Thanks.

A good way to bring about a smoother transaction is if the home owner has been educated to get all the bank's required paperwork in order so as when there is an offer, with the listing history, broker priced opinion and/or comparable marking analysis, the bank is more apt to review offer with open mind because much of the work has been completed. By the way if the realtor know what they are doing they will order a preliminary hud 1 to be included with the offering package. The banks like to know the bottom line as to how much they will get if they go with said offer.

You can order a HUD 1 from the title/escrow company.

I have done a number of short sales and yes, you have to have patience. Ask your agent if the Seller has already been approved for the short sale. In other words, has the Seller submitted all they financials, hardship letter, authorization letter for they agent, income tax returns and anything else that bank wants to see. Also ask if the bank has done it's BPO (Brokers Price Opinion) and determined the list price. If all this has been done, then the process goes much faster. It could still take 60-90 days. They can really be worth it if you can wait.

It is a property where the owner owes more to the bank than the property can sell for. The financial institution must agree to take the lesser amount to satisfy the debt.