Hey guys,
I just got a lead on a property in foreclosure (12+ payments behind) and the sale is on December 12th. I’m relatively new to investing and I’ve never done a short sale before. Is a short sale even possible at this stage of the game and with this little amount of time or is it too late? What do you think my first steps should be? Get the deed on the house and start contacting the bank?
I’m in the NY area. Any advice is welcome!
Thanks
Darius
u can get an “authorization to release information” signed by the homeowner to try and talk to the lender about a forbearance. you would need that for a SS anyway. if the lender approves a forbearance, they will put the back pmnts on the back end of the note and make it current, then you can buy it subject 2. just be careful that the pmnts do not go up much, if at all. you also have to back up a step too, to be sure the current pmnt will work for a subject 2 sale when you sell it otherwise a forbearance will be pointless. then u have to decide what u r going to do with it. this is kind of a deal that u have to decide what your exit strategy is gonna be depending on how you are ABLE to acquire it.
what is the pmnt? making up 12 back pmnts has got to be a big OUCH, but is that an option? depends on what type of equity is in this house, if any and what the comps are. you may not be able to do anything though.
i don’t think there is enuff time to do a short sale. i am not experienced at ss though. on the safe side, however, this may be more than you want to bargain for on a first deal.
BTW you might want to post some details 
This info is not intended to make me sound like an old short sale pro… I just started at this. Nonetheless I believe this to be fair and accurate.
Make sure the home is a short sale candidate. If you have not already established a relationship with a title company and a realtor do it fast. You need to know that comps sold for in the area and what encumbrances are on the property. If homes are selling for or below what is owed on the home you have a short sale candidate.
You need an authorization to release information. You do not need one for each lender if the authorization does not specify… just copy it. MAKE SURE YOU GET THE LENDER’S PHONE NUMBER, FAX NUMBER, CONTACT (if possible), the sellerr’s LOAN NUMBER, and the SIGNATURE AND SOCIAL SECURITY NUMBER FOR EACH SELLER. THEY MUST REMAIN ACCESSIBLE so get phone numbers where they can be reached.
Get the deed. Sellers balk at selling the deed to their home for ten bucks, but since the deed is actually worthless (until negotiations are successful) explain that you need the deed to help them save their credit and that there is simply no other way to do the deal. Be prepared to walk if they refuse. If you don’t get the deed, you don’t get paid.
I found I needed to know what homes were selling for at the auctions. Your title consultant may be able to help.
CALL THE LENDERS and let them kinow you are trying for a short sale. You don’t need to get specific here, just say hi and ask what they would like to see. The whole idea behind a short sale is the idea that the lender is going to get more your way than he will get if he goes to auction, or get close to the same amount, only faster. You are on site, he isn’t.
I’ve had lenders who won’t talk to me until I get their short sale packet, and lenders who would talk to me (off the record and on a private line) before I faxed the letter of authorization.
Hopefully you have a fax machine.
You need to know what shape the house is in. Look for items that would need to be fixed. Get a contractor in there for a bid.
Get your comps together, what homes are selling for at auction and to whom (are they going back to bene or to investors). Prepare your settlement statement… this is another place were a title company is invaluable. Prepare a letter explaining why the lender is going to get more your way then their way.
The first may not be the party who foreclosed first. I have one property where the second foreclosed first and THEN the first foreclosed. They have already postponed the auction once because they know we are trying. The auction is in twelve days and I have no doubt they will postpone again if they need to. We are also three days away from auction on another property, the first knows we are trying on that one. ust secured an agreement with the second and we have no doubt the first on that one will postpone also.
Homeowners are so frazzled by a foreclosure that their brains turn off and they postpone and postpone and postpone, second guessing themselves and running down futile options to save their home.
It’s pretty sad and it’s awfully frustrating.
Luck.
Quick PS…
DO NOT WORRY ABOUT PAST DUE PAYMENTS, INTEREST, AND PENALTIES. IGNORE THEM. DON’T EVEN BRING THEM UP!!!
The very NATURE of a short sale requires the lenders to throw away money. It doesn’t matter if that sum has the words ‘principal’, ‘interest’, or ‘penalty’ before it, they will throw it away if it is in their best interest to do so. Your job is to convince them that it is.
Shoot… another PPS…
If you are going to do this for a living… and I sure am… you need to get FAST. You need to be able to pull all of this stuff together toot sweet simply because homeowners do wait to the last minute!
Hoo boy… life in the fast lane.
Thanks guy for your replies. I’m still working on the deal but the seller and the person who referred me to this deal are being a bit uncooperative. I’ll keep you posted!
Alot of advice for such little results.
Better luck in the future.
Well the future is now
Got another candidate…
ARV: 365,000 (based on recent appraisal)
Owes 307,000 (all on one mortgage)
Payments are behind almost 2 yrs and he’s 70,000 in arrears right now.
Foreclosure auction is scheduled for the 14th and he can be gone from the house on the 11th if we need him to be.
Repairs are minor cosmetic according to him.
He just wants to get out of the house and have the foreclosure not go on his record if possible. He’s already put a deposit down on a rental so he’s ready to go.
I’m going to try to get the deed, get all the necessary paperwork signed and take action but I’m not sure if the fact that there’s no 2nd on it puts me at a disadvantage here. Any thoughts?
u gonna cure that default in 12 days, get a SS packet, or ask for a forbearance?
Getting the SS packet will likely be the move
good luck getting a short sale in 12 days. u might just see if they will allow a forbearance to reinstate the loan, then take over making pmnts and sell to ur end buyer on the same note IF the pmnts are favorable already. see if that is an option
will do…thanks 4 the tip. Hopefully I can get the auction postponed and try the SS though. I’ll keep both in mind. I’ll update you guys on the progress!
2 years behind on payments? It sounds like he may have already requested several
agreements with the lender before. Did he also file a B.K. before? Call the lender right
away to get their approval for a temporary hold on the foreclosure sale date, you might
also want to contact their foreclosing attorney to let them know that you’ve requested
so.