Hello all,
I’m new here and I’m looking forward in learning alot from you guys.
I’ve been watching from the sidelines and I am ready to get out there and place multiple offers. I have access to the MLS and I see alot of Short Sales there.
Do you guys recommend going after Short Sales on the MLS?
Looking forward to all your responses.
Thanks guys.
No - As a Broker in California I also have access to the MLS but the cost of marketing is too steap… I would rather spend the 6% on direct mail and contract the deals with the seller.
Besides too many real estate agents have their head too far up their @ss to understand how to close a short sale much less flip one.
The more you can stay in control the better the deals are.
Thanks Michael,
What has worked for you in terms of direct marketing? I have a very limited budget, do you recommend door knocking or mailing?
Thanks again.
Michael it must be an East Coast/West Coast thing about 50% of our short sale deals come from real estate agent referrals. I agree many agents are hard to work with and do not understand the short sale process but the ones who will just hand the deals over to us to negotiate are gold. We train our agents to put the package together, complete a BPO, and then re-list and re-sell when we have a sort sale approval. Creating relationships with centers of influence are great ways to fill your pipeline with deals if you have a slim budget. I work in NYC as well, just make sure the houses are vacant because of the equity theft prevention act.
So you can use the MLS as a tool to see who is listing shorts in your area, but don’t just make a whole bunch of offers on them. Find out who the agent is, call them and build rapport, tell them want you do, and see if they will let you negotiate the deal. This way they can outsource the mitigation to a great short sale processing company for free and be freed up to go out and find so more deals.
This is the type of agent you want to work with http://www.viddler.com/explore/ShortSaleExpert/videos/29/
Door knocking is great for building a farm as an agent… I wouldnt spend much energy on it as an investor. I like mail the best… If you want to farm, which you should do, Pick the area of town which has the fastest turn time. I always liked less then median price ranges as well.
When farming understand that it could take months or even years to harvest the fruit so DONT stop or change your telephone number…
Speaking of telephone numbers… Check your telephone book right now for the listings of “I Buy Houses” and “We Buy Houses” if they arent there call your telephone company and request that your telephone number be listed as their look up number in your area…
Back to using agents… If you are willing to have a business which depends on other people to bring you deals and do not want to create a top of Mind business use agents…
If you are uncertain how to manage a short sale hire a transaction coordinator for 400 bucks a file and be done with the worry. You can find them by calling your title rep and asking them for a referral to one.
To list the property either obtain your license or use a fee for service agent who will stick the thing in the MLS for 299.00…
We have a full direct mail campaign and internet marketing campaign in effect as well. Real Estate Agents handle 75% of all real estate transactions. You would cut yourself off to so many deals by not working with agents. Working with centers of influence and building a business that thrives on referrals and employees other marketing campaigns is going to far surpass one that does not. Not to mention you can cut your marketing budget down tremendously. There are enough REO’s and short sales on the MLS that if you had no money and a little bit of skill you could easily have 20-30 deals in your pipeline in the next 6 months. Not spending any money!
If you are broke and have no money door knocking is a great way to get deals. Get yourself a pre-foreclosure list and start knocking some doors. Don’t just knock on any door that does not make sense as an investor.
Hi Jon…Great Info.
I’ve gotten no good response from listing agents with short sales. How do you get the agents to say say to your offer?
You advise dealing directly with the listing agent instead of vai a buyer’s agent?
So you advise to build some rapport first, tell them what I do and tell them the benefits for them and their client when I negotiate the s.s. for them.
You advise this first instead of just sending the listing agent a short sale contract offer with explanation of process?
You mentioned doing REO and short with no money. I see how one could do a $10 or $100 option deposit for the s.s., but in this area most agents want at least $1,000 and many want $2,500 for EMD.
Thanks, Peter
Hi Jon,
I have another question. I’m not clear when you mentioned…“to see if they (agent) will let you negotiate the deal”.
I thought this was the homeseller’s decsion and not the agent’s, since the homeseller has to agree and sign the authorization for you to contact the lender.
Thanks,
Peter
Always when you can go direct to the listing agent. They have the control of the deal. We have used buyers agents in the past to recruit listing agents to bring us deals but it is harder to train the buyers agent to do what you want them to do.
When I first approach an agent I do not go direct in to my pitch and tell them how great our team is with short sales. First I start off the conversation talking about short sales in general. You could ask the agent…Do you work on a lot of short sales?
What is the most frustrating things about short sales? What do you wish was different about short sales? These general questions will show you all the different problems that agent is having with short sales. You will be able to use those points to them show the agent why it is a good idea to work with you. Don’t ever ask things like…do you have a hard time closing short sales? Do you find it hard to work with the bank? ETC. These types of questions will make them go into ego mode.(I have no trouble with short sales, we close every deal!) Ego mode is where they put their guard up and you are not getting any info.
Sooo after I build the initial rapport then I pitch the agent on what we do, how are process works, and how we can work together and use each others strengths to get the highest amount of short sales approved and closed.
You never just want to have a buyers agent write up an offer an submit it to the listing agent. When this happens the agents go into “Regular Agent mode” You submit the contract, the seller approves, the listing agent negotiates the deal, and maybe something happens.
With me, I do not want to work on a short sale unless I negotiate the deal. The agent still remains in the process and gets paid full commission but we, “the buyer”, mitigates with the bank. We have a tested system on how to get the shorts done and most agents do not. When all the foreclosures started coming they jumped on board and named themselves short sale experts without even taking a day of training. Loss mitigation at the banks tell our loss mitigators all the time, “I hate working with Realtor’s they don’t know what they are doing.”
Now of course this is not going to work with every agent but you should not want to work with every agent. The goal here should be to find 10 great full time agents that can bring you 10 deals a year. That would be 100 deals in your pipeline a year with no marketing cost. The goal is not unrealistic especially in this market. And considering the “neg am” loans are just starting to adjust the market is about to become even more saturated with short sales.
The agent in this process is just the 1st part. Of course after you pass the agent test the seller has to want to work with you as well. You are already past the major hurdles with the seller though. They want to sell, they know they have to short sale the property, and they know they are not going to get any money out of the deal. You just have to build a rapport with the seller and get the doc’s signed. (Most sellers will do whatever their agent tells them to do anyway.)
With deposit money…
Short sales I give a promissory note. The bank is the one that gets the deposit money at closing the seller is to receive no proceeds from the sale of the house.
REO’s - now this is a differnt story. We use a buyers agent for REO’s. The standard EMD is $1,000 for each REO. The thing with this money is if you do it right it does not come into play until well after the contract has been accepted.
Let me explain…
I inspect an REO
Calculate my offer
Then we write up our offer - contract, proof of funds, and earnest money check
At this time my realtor faxes contract, proof of funds, and earnest money check to the listing agent
The earnest money check is just a copy (and for me I give my earnest money check to my title companies trust)
The listing agent then submits the offer
If it is accepted then after the attorney review period the bank is going to start looking to take possession if the deposit
You can delay for up to like a week before you actually have to produce the money
So in between getting the contact accepted and having to turn over your EMD this is where you are going to find your cash buyer
Lock up your cash buyer, get your assignment fee, and then they step in your shoes and put the deposit money down for you.
Now if this does not work the way it is supposed to you are going to have to find a private lender that will lend you the earnest money deposit. If that is the only thing between you and a $10,000 payday I am confident you will find the money 
Its a lot less expensive to find the deals and circumvent the agent… 20-30 deals every 6 months at 50k a deal is 120k in advertising alone…
And REOs … my goodness if they were a good deal they would never hit the MLS… But I am kicking a dead horse here…
Here is how most investors find a real estate agent to work for… and I used “for” for a reason… You are making them money
Step 1) Look in the Sunday paper
Step 2) Pick out the cutest face - Realtors are famous for using 20 year old pictures so try and not laugh when you do meet them.
Step 3) Hire that person - Not asking them their qualifications. BTW they only get paid if you BUY something and since you’re dealing with lenders and their fiduciary responsibility is to their customer seems to me the agent may not be as forthcoming as they should be.
Once you do buy you are typically paying full value for a property or an inflated value… After all you’re competing with everyone else who uses agents and the MLS on price.
After you finance the property your projections become fantasy-land and reality sets in you fall a few payments behind because you cant sell and your nice little agent helped investment becomes a short sale or REO.
I’m not saying it happens all of the time but it happens way too much because ivestors dont learn how to find the deals themselves…
Anything on the MLS can have a lot of competition whether an REO, motivated seller or short sale. Best way to find great deals are to have zero competition. You can find good deals, but the seller is the bank and can be a real pain.
Dude that’s cool more free short sales for me. I like working with agents and I know a ton of full time successful people who do. I really don’t think you get it.
If an agent brings the deal, we short it, and the agent sells the deals for us how is there marketing expense. The commission and all the closing cost come out of the spread. No money out of pocket up front. Considering they bring the deal and sell the deal I am more than willing to pay their commission (The bank pays most of it anyway)
Why would people look in the Sunday paper to “work for” an agent? We are talking about building relationships with agents that are working in the target pre-foreclosure market. I only work with agents that are listing the deals I want to work on. If someone is buying at a full or inflated value then they are not investors. Just because there is a price a house is listed at doesn’t mean that is what you have to pay. I think you give the competition more credit than they deserve. Most “teachers” tell you to run the other way from agents, I say embrace them in your business. Again agents are involved in 75% of all real estate transactions. Then again I love that most people think this way. More free deals for me 
The agents WE work with make my deals easier. They work under my systems and I have to spend a 1/4 of the time that I would if my agent was not involved in the deal.
And REO’s the competition may have once been the case but not anymore. We are getting a deal a week under contract from REO’s that are listed on the MLS. There are to many for them to all be pocket listings no a days. We are in a new market. As far as pocket listings are concerned we buy those all day too but a newbie who has no relationship with an REO agent to get put on their investor list…good luck. Newbies have to go after listed stuff and build relationships with REO agents so they can get pocket listings.
So you can buy a “free” short sale now? WOW :flush
As for Marketing expense only a wanna be investor who hasn’t learned that all expenses paid within the sales price are costs to the buyer whether or not the seller has authorized them and even if they show up on the seller side of the HUD… Commissions paid are an advertising expense to the buyer…
As for “Dude” dude its getting old 'round here…
“DUDE”, You know what I mean. Free as in no marketing expenses. If you want to get technical you do have closing costs but when you are flipping short sales the closing costs are taken from the spread. So, No “DUDE” its not free but it is no money out of pocket. To me “DUDE” if someone else finds the deal, sells it to my end buyer, and I did not have to bring money to the table and I am walking away with an average of 45K that is sweet and it did not cost me anything.
Lets assume it is free and you made 45k profit, which means you sold for 45k… 6% of 45k equals 2700.00 in advertising… If it aint free then you’re paying a lot more.
BTW have you noticed my last name… I enjoy arguing… Especially when I am arguing with a wanna bee… Sorry Moderators…
I am from Jersey I came out of the womb arguing with people. After you have masterminded with some of the greats like Vena Jone-Cox, Wendy Patton, Peter Conti, Tim Randle (The owner of this site), and many more real estate greats like me then you can start calling people names. Come to New Jersey and I will show you how a real, Real Estate Investing business runs.
Short sale case study
Property in Summit,NJ
1.2 Million dollars in liens on a 1st and a 2nd
Agent list the house
Agent brings the deal to my attention
Agent collects short sale package from seller
We negotiate a short payoffs to a total of $410,000
Agent Brings a end Buyer for $510,000
We pay a 5% commission $30,600 to the 2 realtors on $510 price
The bank is paying 5% on the $410,000 which = $24,600
We have an addendum with the listing agent we are going to pay 5% total on the B to C transaction. Which means we take the commission from the 1st deal and move it to the 2nd deal. So the bank pays 24,600 and we pay 6,000 in commissions.
Add on the other closing cost for the deal is was about 25k because we gave the end buyer a small repair allowance.
And then we walk away with the difference. Profit of about 69K
Now you starting to see how this works. Open up your mind.
One of those people need to teach you how to multiply… Add and Subtract… :bs
Ooooo excuse me for making a mistake and making it a 6% commission. Notice the post time. Real men can do that and get away with it. Like I said if you want to see how a real, real estate investing business runs come to Jersey. You’re just mad because you’re not as cool as me DUDE. Hahahahaha
I guess I am too passionate about this crap… I need to go have a beer and chill… Maybe get a pedicure… Play with the doggie and evaluate life’s purpose.
I was looking for the smiley where it’s eating popcorn but they don’t have it. :cool
Carry on gentleman.