Bill O'Rafferty's daily info of importance

Nothing you have suggested appears illegal, nor unethical, as long as the bank knows what you are doing and you have a statement signed (I like notarized) by the former owner recognizing that you are involved in the transaction to make a profit and that any involvement in the redemption will be to make a profit. They might also indicate if they are able to redeem without you (and they will not be). As long as everything is disclosed, you should be fine.

I received a questions from a DGer who had been told one can no longer flip to an FHA buyer. Not true.

In the 1980s, HUD created an anti flipping rule out of fear investors were buying all foreclosed homes and turning around and selling them to FHA buyers without doing anything and making a profit, essentially controlling the market. This was a crock and in fact investors take properties that will not qualify for FHA financing, fix them and then FHA buyers get a fully restored home at market value - but am I surprised the feds would screw up the market? No.

This past summer the anti flipping rule was suspended for 2 years and basically the suspension says investors cannot exceed 20% profit above costs - sales price, cost to repair, etc, if flipping to an FHA buyer - this is only to FHA buyers. If you can sell with more than 20% profit, you need to sell to conventional buyer or wait the 90 days. After the 90 days you can make whatever profit you want. I don't know about your market but 20% on a flip is rare - 10% is more usual.

The suspension was put in place to make FHA buyers eligible for homes they were missing the opportunity to purchase as a result of the arbitrary anti flipping rule - something some Washington DC jerks put in place to screw up the free market as a result of a few complaints.

Happy Sunday

Thanks for this info Bill. I had a mortage broker try to explain this to me and you have given a better explanation.

Steve

about short sales could you please give me step by step info i would so appreciate it.I am in the success academy and a member of the SFL program i have been going none stop for 5 weeks and just about to get over the hump and start making money its so close i can feel smell and taste it. i have to make this work i have spent every dime i have and people think im insane i know im not i just need the last part of it all to succeed it seems like this last part is the hardest, im doing everything i was told to so i know it will work ..and ill never stop tying i want to make money not excesses!!!
PS I really liked your presentation at the edge 10 thank you Bob & Sandy

need hard core advise

I have 5 good buyers,I have 7 property's that match there criteria.I am a member of the academy and the SFL program but i am scared to death to lock them up under contract for some reason?? Im doing assignment of contract do to bad credit and paying off debts .. Example- total view says there at 100k listed at 65k i figure to offer 55-60 to the seller, my buyers want 30% equity so they should pay 70k right?
There is defiantly room for error and profit right, so why am i so scared any body that has been at this most critical point please tell me i need to just do it i dont know why im so scared maybe because every other thing i ever tried didn't work ? and i want this to work so bad i have heard it from all that have made his work that this is so easy and it seems like it is , witch to me seems to good to be true.
I have been none stop at this for 5 weeks making progress like i should hitting all goals an know Im right there, so why am i backing off and scared .. if you have been in this spot and made it work like i know it should and will please help me to understand and get past this i need this so bad. Right know i need to hear from people that got past this most important part of this great journey
Help Me Understand
Bob & Sandy
__________________

robert a sanfilippo

I try to tell all the truth all the time, leaving room for optimism, but being serious and cautious. In your scenario above (post 158) it looks like you have over-analyzed the deals. I do not recommend doing 5 at a time but make the numbers work and pull the trigger on one or two. Take the best looking deals (financially) and make a buck - then you will have more confidence to do multiple deals at once.

In the scenarios you give, you can initiate all 5 deals and withdraw within your timelines and have no cost but your work. Or select the best and cancel the rest - do not fear failure so much you are paralyzed to act.

Move on these deals (one or some) and let me know how it goes - remember, work hard, be smart and no whining.

Thank you, I'll try that.

I talk personally and by email with quite a number of would be DG investors who want to do a flip or do an assignment, and we go back and forth some times on what and how. Remember there are many ways to make a buck on real estate and while many strategies work, not everything works everywhere at the same time. If those in the know tell you it is a good market for flips but the banks will not allow assignments in your area do not pound your head against the wall trying to assign a property - look for ways to be involved in the flips. Always, always bird dog any opportunity in your area not available to the general public (neighbors, friends, relatives) but the message for today is you will lose if you try what you want to do if the market in your target area is not hospitable to that strategy. Use the strategy that works in your area regardless of what you are in the mood to do.

You can either work hard to get people to follow you or run to get in front of the crowd that is already moving in one direction or the other - you lead the pack in either case and one is much easier.

Hi bill thank you for responding i wasn't thinking of going for all the deals at one time,i was just saying that i have all this setting in front of me and i feel scared and getting cold feet just wondering if this is natural to get cold feet at this point of a first deal.i did talk to academy last night and called my agent and told her to put one of the better deals under contract but i still feel scared to death
Thank you bill and have a great day
Bob & Sandy
PS i talked to Dian she is awesome

I have quite a few investors right now chomping at the bit to get into a flip or try to assign a property and now is not the right time in many venues. Summer raided the investory, banks have slowed in foreclosures and the holidays are coming. None of these means numerous great deals waiting to be plucked from the tree. In late December and January no one but the hard core investors are looking at properties and you might get the same property 10% less than you could buy it now. Do not expect the market will meet your timeline - many dollars lost with that thinking. Get your funding together, keep looking for the great deals and within the the next 8-10 weeks there will be deals a plenty - fish bite when they are hungry not when the fisherman is hungry.

In the current market, appraisal prices are all over the board for many reasons: reo properties in poor condition, banks take much less than FMV on short sales, buyers get frustrated and offer way above list price - prices are all over the place. When appraisers look at comps, they should be trying to find sales of homes most similar to the subject property. Unfortunately, some appraisers are taking the lowest sales in the area so as to no be accused of over stating the value and others are going to the highest sale to use as a comp - neither of these is competent work. It is important these days more than any in the past 15 years that an appraiser really know the market in the area they work but unfortunately they do not in many cases. Big banks send appraisers from 50 or more miles away to do appraisals they sometimes they just get it wrong. When this happens, get your own comps, sent to your loan rep or whomever ordered the appraiser and tell them what is should appraise for - you can get it changed if you are persistent. Do not let a crappy job from an appraiser ruin your deal - contest the appraisal and often you can get adjustments that make things right.

That deal didn't go through,and thanx for the above posts i need patients,i just want that first deal so bad to get in the game and sick of people telling us we are crazy.
We will never give up though we did start a journal its Bob & Sandys journal please check it out .
Your comments are always appreciated.
Have a great day Bob & Sandy

Recent stalled foreclosures will not change anything in the long run according to major banks and economists. Statistically, once a homeowner is 3 months behind on payments, 92% of the time the home is foreclosed upon or sold short. Once payments are 6 months behind, less than 1% of the time will the home be saved from foreclosure or a short sale in lieu of foreclosure. Most loans targeted for audit in the recent halt of foreclosures are more than one year delinquent in payments. This is a political move not a financial one. Homeowners looking for loan modifications think they will get a principle reduction and they will not - not one of them. Thanks to the government interference, we just pushed market recovery out a few more months and are allowing those living for free, not having paid payment in years in many cases, to continue to live for free months longer.

I have feelings for the folks that purchased at the high and now are upside down and in trouble. However, most reo properties I sell are foreclosed upon after owners refinanced more than one time, pulling out cash, and now they cannot or will not pay it back. This is what is killing the market. The market could absorb the few homes sold from 2003-2006 quite easily. The bulk of foreclosures however, are those who had homes before the rise in home prices, cashed in on the rise in prices by taking cash out, and now are in trouble looking for someone to blame. The blame in many cases should be shared by the homeowners that over encumbered their properties and now want a bail out.

Here is a thought. If banks give principle reductions to the guy that refinanced and spent the money, all his neighbors will say, "Hey, I am getting screwed because I was responsible." This would cause defaults to rise significantly. Even if we wanted to forgive some loan principle, we could not do so for the fall out of the response to that from those paying their payments would totally collapse our economy.

What about putting the bank on notice and have them produce the original "wet ink" documents? would that help that 92% and if yes, how?

per your question above, the best evidence rule in court (and court cases rule every application of law) says we have a right to examine the best evidence which by definition is the original document - if you ask to examine the original documents they may never be found and that will slow things significantly. It will not, however, stop anything as the bank gets to say this is the best evidence available - they have met the burden at that point (this is a simple example but that is basically how it works). Asking to see the original note may cause the bank to move on a short sale or something where they are dragging their feet, but it will not cause them to forgive losses in most cases - sorry

With no money and no credit how do I get properties under contract such that I can assign them - a questions asked by a DGer?

Google hard money lenders - call all of them in your area - get 3 or 4 letters of approval for hard money - use all of them, attaching them all to the offers, you will be treated like a high roller.

Thanks Bill for that info. I have about three different Guys trying to sell me courses so I will learn what to do now. I have not heard or seen anything from Dean on this subject, so to be honest I was a bit afraid to move forward. The other guys say how small time investors will walk away from investing, and using hard money, cash deals is the way they did it in the nineties when this happened before. Then they try and sell you there course. I will print this and show it to my husband.

Have a great day,

Charisse

thats true, but arent most banks already up (money wise) because when you sign your house is paid for in full, then your note is usually wraped up in a package and sold (i need to do more research) to someone else. Banks are not suppose to make money on their own credit are they?

Banks make money on everything they do. When a note is signed with the bank they can sell it but when you pay that note off, they must reconvey the property to the borrower - no more selling the note once it is paid off.

The recent halt in foreclosure will cause fewer homes to come on the market and raise prices temporarily at least. In the long run, we may see a flood in listings next spring or summer as the foreclosures catch up again which will push prices back down probably lower than now. Has this speculation cause me to stop buying - no. Prices and interest rates are so low I will not see 5% up or down as a trend that drives investment decisions. Long term investments will be looking for 50% appreciations - 5% one way or the others is not relevant.

For this awsome thread. Your knowledge of real estate and the market is out standing.

Steve

it seems that I have been focused on things that are not going to help me make money, instead i should be focused on creating a buyers list and not so much on what the banks are doing. Thanks bill

I had a conversation the other day with a would be investor about the management of wealth - $20,000 or 20 million - the discipline is the same. Put money in the bank or in an investment with the intent of capitalizing on it later, put off the instant satisfaction that comes with having what you want when you want it, build up a reserve beyond paycheck to paycheck living - the point is this - discipline to hold something that could bring you instant gratification in exchange for better opportunities down the road. If you can save and deposit 20K in the bank it is no different than having 20 million in the bank - the numbers are bigger but the structure is the same.

When you have that discipline and confidence, the confidence that comes with having more than you need, not more than you want but more than you need, you will be so much more effective as a real estate investor. The way you carry yourself and manage your business will look much different to others when you project the image of success - and 20K in the bank is success. So even if they have 20 million, it will not matter, you share their confidence of success, have attitude in common with them and will be invited to play in their game - the game of successful people.

I work with a lot of realtors that buy Mercedes and Beamers when the market is good and lose their homes to foreclosure when the market falls. They had some success but were not successful. I work with those that live well but invest when the market is good, live more conservatively, and hold on when the market fails such that they can ride out the storm to be able to invest yet again when the market returns. Over a decade or two, the first group has little upon which to retire and the second group travels when they want, helps put grandkids through college, etc.

Manage the money or it will manage you. There is short term success in making money - management of wealth allows you to have money and that is a completely different thing.

When banks foreclose at a trustee sale (Sheriff's sale) they often lower the price owed so they just get paid immediately and do not need to evict, clean up, sell, etc. If you have a buyer's list that includes cash buyers, go to a sale and see what discounts are common. For instance: bank is owed 362K and FMV is 200K, the trustee (or Sheriff) might be instructed by the bank to begin the sale at 172K. This is generally about the discount you will see. Banks figure what they will get after all the foreclosure work and offer properties at that price. Some times this is no deal but often it is - they set the price out of St Louis on BofA properties and the property is in Ohio, they get it wrong often - attend a couple of these sales (on the courthouse steps) and get familiar with how it works and then take your cash buyers there for a $2500 or $5000 fee. You need know only a little more than the buyer to make you valuable. Ask the auctioneer anything you want, be a pest, they will answer all questions and are usually very open to helping folks learn how to bid at these sales.

Remeber to check with a reputable title company to see there are no superior liens - if you purchase the 1st you are good - buy the second and you still need to satisfy the 1st trust deed.

Your blogs are full of useful knowledge, keep it up!

The LA Times is reporting Bank of America will foreclose on 100,000 homes next month and has taken time to investigate policies and practices. While foreclosures are not full speed ahead again, it has already opened up for BofA and the others will follow.

We did not even get a nap during that "Halt" on foreclosures.

The winds are blowing toward numerous reo properties in the early spring. I have quite a number of investors anxious to buy, chomping at the bit, ready to bid more than they should. I have others wanting to put in offers at 60% of asking price, wondering why I am telling them it is not a good use of time - right now, properties are selling at or above list price because there are few listings (mid west excluded) and many buyers. I have written before and I write again - be patient and use the market fluxuations to your advantage - buy in Feb and March to flip in May and June - unless you get the killer deal - just because you want one does not mean the market is ready to roll. We need to be patient right now.

Thanks as always for the sage advice.

We all want to believe we can produce for buyers the deal we forsee. Be cautious not to over promise. If the outcome is greater than buyers expect, we are the hero. If results are less than anticipated we are miserable failures. Always be conservative in your estimates, disclose that there are no promises or guarantees and hope to over deliver. Some will be disappointed, but always try to keep that population to a minimum.

listings. Have your local realtor automatically program an email to you that gives you the listings of regular sales, not short sales or reos, when they expire. 30% of our market is now regular sales up from 12% a year ago. Regular sales are often overpriced and the listings expire. Get the list from your realtor, use white pages dot com or another search engine and try to get the scoop on why it is being sold - work your buyers over and see if the seller will pay you a commission or referral for making the connection between buyer and seller. This is a great market for working expired listings: need to sell, did not sell, no hope market will get better, again, NEED TO SELL. Therein lies opportunity.