OfflineReal Estate Investor Training—Short Sales
Because of current economic conditions in the housing market there is a great deal of investor interest in the technique of purchasing investment property with Short Sales. So--what is a Short Sale? A Real Estate Short Sale happens when a seller’s bank allows a property to be sold for, and accepts a payment of, less than the amount owed to that bank.
A rough example would be if a home owner currently owed $170,000.00 on a mortgage and the bank holding that mortgage agreed to allow the home owner to sell the home and payoff that mortgage for $150,000.00.
An overview of a short sale technique might work like this… You the investor would start by doing a marketing campaign or sign up for program to find prospects. Having found a few names you would contact the prospects and get one of them to agree to proceed with the short sale. When you have reached an agreement with that prospect, ask for a copy of their last bank communication to verify that what they have told you is accurate.
Before going any further you must search the public records in order to uncover any additional liens that may exist. This is important so that you can decide weather to stop the process or try to work with these creditors to get the liens removed. If you choose to continue, have the seller contact their bank or mortgage companies’ short sale department and ask for a third party contact authorization and a Short Sell forms package.
After the bank’s short sale kit arrives--have the seller fill out all the forms and paper work and return it to the bank. They should also give you the third party authorization information. Now you should contact the bank using third party authorization and talk with the person assigned to the case.
The bank should give you instructions for submitting your offer. When you submit your offer be sure to reserve the right to do a full inspection of the property should your offer be accepted. When the bank replies to your offer you should be prepared and negotiate if necessary. If your offer is approved you will need to monitor and promote the project periodically.
If that sounds like a lot of work to you—you understand the program! But there a few advantages to the short sale technique. They include:
• Instant equity
• Lots of prospects
• It’s so complicated and time consuming that only a few competitors persevere
• It is a good fit for systemized process
• The seller could avoid foreclosure
• There is a lot written on subject
There are also some disadvantages and some of those are:
• You will be dealing mostly with unmotivated and unhappy sellers
• You will also have to deal with banks
• The seller may owe taxes on the unpaid balance
• This technique take longer than many other ways of finding deals
• Seller may still owe the bank the difference
• You cannot pay the seller any money if you want to stay out of jail
• There may be other liens on the property
Considering the disadvantages to the seller--why on Earth would a seller ever agree to sell you their home this way? There are three main reasons. The sellers that agree to work with you do not want to have a foreclosure on their credit record, they do not want their credit to suffer more that necessary and they have become tired of dealing with, and want to be rid of, the debt.
Why would a bank agree to take less than the full amount owed? The bank or mortgage company may be more motivated than you think for a number of reasons. The value of property may have dropped since the loan was made. The buyer is behind on their payments and they want to avoid having another bad debt on books. There are federal penalties and restrictions for banks with bad debts on their books. And the bank may just want to avoid the hassle of having to foreclose, take over the property, get it fixed up and market it just to try to break even. And break even is all a bank is allowed to do.
There are several ways to find short sale opportunities but the quickest and easiest is to sign up for one of the many short sale programs on the market. Just use any internet search engine and to locate one that meets your needs and budget. Many of these programs offer lead generation and scripts for what to say to prospects. They also provide advice on filling out the numerous forms required. If you are determined to reinvent the wheel, you can buy a list and send out letters to attract potential short sellers. Or--you could just run a campaign of ads that could include advertising:
• In newspapers & tabloids
• With flyers
• Passing out cards
• Using Birddogs
As you can see the short sale technique is not a quick and easy way to start on the road to real estate investing wealth but by devoting a good deal of study, hard work and time, it can become a profitable technique to use in your quest for investing success.
I hope this article has helped you in your quest to build wealth through real estate investor training.
Dennis Henson
"THE ARCHITECT OF YOUR DESTINY IS YOURSELF"
"SUCCESS WALKS HAND IN HAND WITH FAILURE"
Thanks for this article sistreat!!! What I like about his website is that people are discussing current real estate market transactions. I have seen other people do this kind of transactions before (took about 3 months total, but the owner abandoned the property so that was a major hurdle) but they're about ready to close with built in equity, although minor, but money is money. I myself am trying to get my feet wet!!! I'm at the edge of the pool looking in.....ugh....
Hi James
Glad you like the article. It is very informative. I see many people walking away from all their equity these days. Some people like SS and some people say they are a pain. I think Obama has gave work to the banks to just get the short sales off the books and work more freely with people to eliminate these off the bank books...which is good for those of us investing.
You gotta jump in the pool and learn to swim! I never seen a successful duck who stood on the edge looking in! LOL! Glad to meet you!
Sissy
"THE ARCHITECT OF YOUR DESTINY IS YOURSELF"
"SUCCESS WALKS HAND IN HAND WITH FAILURE"
Sistreat,
Thanks for this very motivational and enlightening article. As a newbie, I need this type of article to have a detailed idea on top of what I have learned from Dean's book. Keep on going... dom
Hi Dom and welcome to the board. These articles are very informative. We try to stay very current here on Deans site. Real estate is eever changing and you have to stay on top of all the new techniques and laws. Just keep on reading everyday and you will be making deals before you know it.
Knowledge is power!
Sissy
"THE ARCHITECT OF YOUR DESTINY IS YOURSELF"
"SUCCESS WALKS HAND IN HAND WITH FAILURE"
I talked with a realtor and he thinks I should try short sales but, tells me I need to make offers at least $5000-15000 over what the list or asking price is other wise they won't even look at it. What do you all think
Realtor's are thinking on a different mind set. The Objective is to get the seller out of his financial burden. Where is there if done the realtor's way, a way for you to profit? Contined success.......Lubertha
"GOD IS STILL IN CHARGE, HE IS THE AIR WE BREATHE"
Thanks that's what I thought why would I give more money up but, with a short sale how do you talk with the seller if the bank owns it and there asking a certain price.
You need the seller to sign an 'authorization to release information' form and a 'power of attorney' naming YOU on both. This will give you the legal right to discuss the mortgage and the bank a fiduciary responsibility to talk to you on the seller's behalf. It is a complicated process, however, you are basically negotiating with the bank to reduce the amount owed in order to create equity so you can flip it for a profit. The bank's motivation is that they lose less with a short sale vs foreclosure. The overall process is much faster and the loss is less.
Thanks!
Kevin
"Learn and Earn!"
Thanks Kevin, learning something new everyday didn't want to put out money want to get money.
The coaches never said anything about getting the seller to sign a POA when I was temping to do a short (it fell through).
Did you do this Sissy? Kevin? I think most sellers would be afraid to do this, just my 2 cents..
Dawn
Life's a Dance you learn as you go...GET HAPPY FEET!
"Most of the important things in the world have been accomplished by people who have kept on trying when there seemed no hope at all." ~Dale Carnegie
When you address the sellers in regards to their current situation and you lay out how your intervention will effect them, they will understand that they will need to give you visibility on the situation so that you can better assess them. It would be like offering to fix someone's car without doing a diagnostic on it to know what needs attention.
Where I'm having a challenge, is with the banks/lenders where the short sales are reviewed. When I submit to them a Brokers Price Opinion ( BPO ) based on comps in the area, they were reluctant to entertain a considerate all cash offer because they told me that " the offer had to at least NET 75% of the loan". Now maybe this was just a lender specific issue or perhaps they are more eager to take the hit in hopes of getting bailed out or that if they take too many losses (short sales) then they won't be eligible to borrow more money for themselves.
I would prefer to work with people rather than institutions as institutions are not reacting rationally seeing as how they are not in the Real Estate business and/or equipped/concerned to handle issues on the consumer side of this crisis.
So I'd love to hear how everyone here is finding the motivated sellers still with equity remaining (not upside down) OR what circumstances need to exist in order to get the institutions to accept an amount low enough to "create Instant equity" ???
- Tommy
Hi everyone Im the new kid on the block. My son is doing a short sale on his property to avoid foreclosure, I was not sure how that worked until now (thank you) He started investing in real estate about three years ago so now his renters are not paying him. He has done a lot of work to his multi family house that he also lives in. I feel so bad for him, but I dont know how I can help him 1200 miles away. so if there is anybody in Connecticut that wants to check out short sale get in touch with me please. I would like to think this is the way to go for him and others out there but dont know if this will save him from foreclosure. How long will the bank wait until they start forecloseing when you do a short sale? any more info would be great. thank you Diane & Brian
Well, it might be different in connecticut but in california it takes at least 6 months before the actual foreclosure takes place. you can easily call any realtor in your area for better details.
Needs some serious motivation...Should i contact agents with short sales or the sellers themselves, Have the address but only agent's number.
Thank you for the reply I will call my realtor tomarrow
Very informative article on Short Sale. These properties are out there especially now. We just have to go out and find them.
Sandra
"You can never get to the top, if you are not willing to climb. Do not look at the difficulty of the climb, only anticipate the view from the top."
"Can't even walk without you holding my hand." (Song)
"Is anything too hard for the Lord ..." Genesis 19:14
"In all things, wait on the Lord."
"Think not of your own deliverance, but trust in God who will give in abundance."
"When you are down to nothing, God is up to something." Unknown
"Our lives begin to end, the day we become silent about those things that really matters." Dr. Martin Luther King Jr.
For those of you doing short sales directly with home owners, and looking to do a simultaneous close to and end buyer, how are you getting around the 90 day minimum seasoning requirement that the end buyers lender will have? Any feed back or strategies are appreciated.
Mati
Live life today, because you never know what tomorrow can bring!
For those of you doing short sales directly with home owners, and looking to do a simultaneous close to and end buyer, how are you getting around the 90 day minimum seasoning requirement that the end buyers lender will have? Any feed back or strategies are appreciated.
Mati
Live life today, because you never know what tomorrow can bring!
I am looking to work directly with homeowners where they can qualify for a shortsale. I have two areas of concern that I'm looking for feedback and input:
I am going to be submitting some short sale packages directly to lenders on behalf of the homeowners once I have them agree to my terms. How do I go about convincing them to add me to title of the house, so that I can ultimately flip the home and satisfy lender seasoning requirements?
What tactics can I use to influence the bpo when it is carried out for the bank?
Thans for the input all.
Mati
Live life today, because you never know what tomorrow can bring!
I am looking to work directly with homeowners where they can qualify for a shortsale. I have two areas of concern that I'm looking for feedback and input:
I am going to be submitting some short sale packages directly to lenders on behalf of the homeowners once I have them agree to my terms. How do I go about convincing them to add me to title of the house, so that I can ultimately flip the home and satisfy lender seasoning requirements?
What tactics can I use to influence the bpo when it is carried out for the bank?
Thans for the input all.
Mati
Live life today, because you never know what tomorrow can bring!
I am looking to work directly with homeowners where they can qualify for a shortsale. I have two areas of concern that I'm looking for feedback and input:
I am going to be submitting some short sale packages directly to lenders on behalf of the homeowners once I have them agree to my terms. How do I go about convincing them to add me to title of the house, so that I can ultimately flip the home and satisfy lender seasoning requirements?
What tactics can I use to influence the bpo when it is carried out for the bank?
Thans for the input all.
Mati
Live life today, because you never know what tomorrow can bring!
I am looking to work directly with homeowners where they can qualify for a shortsale. I have two areas of concern that I'm looking for feedback and input:
I am going to be submitting some short sale packages directly to lenders on behalf of the homeowners once I have them agree to my terms. How do I go about convincing them to add me to title of the house, so that I can ultimately flip the home and satisfy lender seasoning requirements?
What tactics can I use to influence the bpo when it is carried out for the bank?
Thans for the input all.
Mati
Live life today, because you never know what tomorrow can bring!
I am looking to work directly with homeowners where they can qualify for a shortsale. I have two areas of concern that I'm looking for feedback and input:
I am going to be submitting some short sale packages directly to lenders on behalf of the homeowners once I have them agree to my terms. How do I go about convincing them to add me to title of the house, so that I can ultimately flip the home and satisfy lender seasoning requirements?
What tactics can I use to influence the bpo when it is carried out for the bank?
Thans for the input all.
Mati
Live life today, because you never know what tomorrow can bring!
I am looking to work directly with homeowners where they can qualify for a shortsale. I have two areas of concern that I'm looking for feedback and input:
I am going to be submitting some short sale packages directly to lenders on behalf of the homeowners once I have them agree to my terms. How do I go about convincing them to add me to title of the house, so that I can ultimately flip the home and satisfy lender seasoning requirements?
What tactics can I use to influence the bpo when it is carried out for the bank?
Thans for the input all.
Mati
Live life today, because you never know what tomorrow can bring!
I am looking to work directly with homeowners where they can qualify for a shortsale. I have two areas of concern that I'm looking for feedback and input:
I am going to be submitting some short sale packages directly to lenders on behalf of the homeowners once I have them agree to my terms. How do I go about convincing them to add me to title of the house, so that I can ultimately flip the home and satisfy lender seasoning requirements?
What tactics can I use to influence the bpo when it is carried out for the bank?
Thans for the input all.
Mati
Live life today, because you never know what tomorrow can bring!
I am looking to work directly with homeowners where they can qualify for a shortsale. I have two areas of concern that I'm looking for feedback and input:
I am going to be submitting some short sale packages directly to lenders on behalf of the homeowners once I have them agree to my terms. How do I go about convincing them to add me to title of the house, so that I can ultimately flip the home and satisfy lender seasoning requirements?
What tactics can I use to influence the bpo when it is carried out for the bank?
Thans for the input all.
Mati
Live life today, because you never know what tomorrow can bring!
I am looking to work directly with homeowners where they can qualify for a shortsale. I have two areas of concern that I'm looking for feedback and input:
I am going to be submitting some short sale packages directly to lenders on behalf of the homeowners once I have them agree to my terms. How do I go about convincing them to add me to title of the house, so that I can ultimately flip the home and satisfy lender seasoning requirements?
What tactics can I use to influence the bpo when it is carried out for the bank?
Thans for the input all.
Mati
Live life today, because you never know what tomorrow can bring!
I am looking to work directly with homeowners where they can qualify for a shortsale. I have two areas of concern that I'm looking for feedback and input:
I am going to be submitting some short sale packages directly to lenders on behalf of the homeowners once I have them agree to my terms. How do I go about convincing them to add me to title of the house, so that I can ultimately flip the home and satisfy lender seasoning requirements?
What tactics can I use to influence the bpo when it is carried out for the bank?
Thans for the input all.
Mati
Live life today, because you never know what tomorrow can bring!
I am looking to work directly with homeowners where they can qualify for a shortsale. I have two areas of concern that I'm looking for feedback and input:
I am going to be submitting some short sale packages directly to lenders on behalf of the homeowners once I have them agree to my terms. How do I go about convincing them to add me to title of the house, so that I can ultimately flip the home and satisfy lender seasoning requirements?
What tactics can I use to influence the bpo when it is carried out for the bank?
Thans for the input all.
Mati
Live life today, because you never know what tomorrow can bring!
I am looking to work directly with homeowners where they can qualify for a shortsale. I have two areas of concern that I'm looking for feedback and input:
I am going to be submitting some short sale packages directly to lenders on behalf of the homeowners once I have them agree to my terms. How do I go about convincing them to add me to title of the house, so that I can ultimately flip the home and satisfy lender seasoning requirements?
What tactics can I use to influence the bpo when it is carried out for the bank?
Thans for the input all.
Mati
Live life today, because you never know what tomorrow can bring!
I am looking to work directly with homeowners where they can qualify for a shortsale. I have two areas of concern that I'm looking for feedback and input:
I am going to be submitting some short sale packages directly to lenders on behalf of the homeowners once I have them agree to my terms. How do I go about convincing them to add me to title of the house, so that I can ultimately flip the home and satisfy lender seasoning requirements?
What tactics can I use to influence the bpo when it is carried out for the bank?
Thans for the input all.
Mati
Live life today, because you never know what tomorrow can bring!