Hello. I’m trying to do some wholesaling but a couple of times I heard from the home owner they want to do a Short sale. If they are in a bad position now( MTG. lates, etc) is it really worth their time? In order to submit a SS to a lender don’t they need a Buyer already in place? Plus with the current market are lenders that eager to take less?
Anyone with input? I just want a general understanding of WHEN a SS would be beneficial to anyone???
Yes, it can be very much worth the time to the homeowner. If their options are between foreclosure and selling the home they will obviously be better off selling their home, effectively avoiding a foreclosure on their record. A foreclosure on ones record does hurt for many years, even more than a bankruptcy.
Yes again, in order to submit a short sale offer there has to be a legit offer placed on the property. Legit meaning that a real person who is capable of obtaining real funds for purchase. Some short sale books, seminars, boot camps, etc. are still teaching people to submit a ‘fake’ offer to the lender. I know for a fact that this practice is an act of fraud.
A short sale can take a long time. I’ve had some take as long as 10 months while at the same time, I’ve had some that only took one month. Each short sale will be a little different with new obstacle’s to overcome. But as you get a few under your belt you will get better at identifying each potential short sale you have as a ‘good’, ‘bad’, or ‘maybe’. This will surely decrease the amount of time you spend working on deals that will never close.
I’d have to agree. I have done over 200 short sales and some of them only took a month to get approved and the more difficult ones and not so difficult ones took almost a year.
In the ones that took almost a year, it was really just the mortgage company not really caring about the case at all. The loss mitigator just wouldn’t return phone calls or would not be in or on vacation, then it would be transferred to another one and I had to get to know them all over again.
But for the most part, I have had great success in getting them done.
Good Luck!
So from the sound of it, both of you are BUYING the property yourself. What if done from a real estate agent, with the agent handling the deal? Or can an individual approach the lender direct and offer to buy the property.
Plus I guess it really depends on lender approval.
Thanks for all your help guys.
If you are a Realtor and you are satisfied with making only your commission then you could be very successful using short sales…as long as you find the end buyers. When a negotiator is a Realtor and they conduct a short sale for ONLY the commission and not by creating a larger spread the lenders will generally net more. PLUS, you don’t have to buy the property yourself. It is not illegal or against any policies to pay a Realtor commission on a short sale. Pretty much the only down fall is that you don’t make as much as if you did it the other way.
GooD Luck! :beer
To jlexinv: w-o-w! :bobble 200 short sales! I’m sure it feeds your family well!
I have 6 of them going on and getting discouraged every time I’m talking to the bank! I have this one for 3/2 SFR and the homeowner owes $247K
Present market value is $227K. At first I offered $135K, then counter $145K and now the Bank is asking $160K and no closing costs for them. What to do? My buyer can afford $180K only and has no money for closing! 2007 taxes are not paid and it’s $5100 just for tax! What to do? :help
So let me get this straight. I have a prospect who owes 198K and home is worth maybe 210K.
What would we offer the Lender?
Or I have another who owes 235K and home is worth 190K.
In order to make the deal work,profit wise, what would we offer and are what are lenders willing to lose?
I’d go after the second. The first has equity in the property, so unless you can eat that all up in justifiable expenses I wouldn’t spend too much time on it. I would choose the property that is over leveraged before I chose one that has equity in it.
GooD Luck! :beer
tvaldez… short sales work for all involved. The time it takes is worth the reward for you as long as you know how to properly evaluate the property.
We have developed our own system and team (the team is more than just important, it makes the difference between success and failure).
I believe the research and evaluation process of the property is paramount to the short sale deal. Most guru’s teach a percentage of ARV or MV in their sysrem. I do nothing by percentages. I have a marketing team that brings in leads, a construction company and real estate firm that prepare market analysis and estimate of repairs and damage, a team of in house negotiators to deal with the banks and a current membership of investors to buy the properties. We put together a solid package for the banks to review along with a proof of funds letter with our offers. The banks either take the offer or they refuse. If they take the offer, we make a great buy and profit, if they don’t we shelf the deal for a month and reapproach and keep doing this until the auction. This a same package also works well with REO’s.
Just remember that the more ligitimate and provable your package, the better your chances are.
It sounds like you have a great thing going and I agree with everything you mentioned. I have a very similar system in the making with all of the parts of the machine in place with a few exceptions. You mentoned, “a current membership of investors to buy the properties”. I assume you are refrring to the end buyer investors and you are the initial investor. We call it the A side and the B side. Could you just confirm that I am correct in assuming you are the initial investor?
I am on the real estate side of things as the Realtor and have just gotten together with a 4 person team (two married couples) for the initial short sale purchase from the bank. I list the home while they have the Seller put the home into a trust where the Seller is the benficiary and the investors are the trustee. While they negotiate the short sale of the property with the banks I am looking for the end Buyer. If we don’t have an end buyer by the time the short sale transaction closes we obviously keep it on the market until it sells and I make my commission. If the investor cannot get their deal done with the bank and I, the Realtor, have an offer that the bank will accept it is submitted and my commission is earned on that sale.
I have been working short sales for about one year as just the Realtor and with very good success. The problem is that I can only handle a few at a time by myself. Now that I have begun to work with these investors and the rest of the team, the potential for me to make even more money is exciting. The investors I am working with have spent over $100,000 in training, private mentors and attorney fees. In other words, they are very serious abou the business and want to do it properly. Right now we are working on our first deal together and I want to make sure that everything I have mentioned seems proper.
I can tell that you know what your doing by your quality post on this topic. When you mentioned that the team is more than just important, it makes the difference between success and failure I had to send you this post. Do you see any problems with the above scenario? Any conflicts of interest with receiving a percentage of the profit margin? How do you involve and compensate your real estate postion on the team?
Thanks so much for taking the time to read this and your consideration in providing a reply. I’d like to keep in touch with you. Hopefully, we can help make each other’s businesses more successful. Have a great weekend! :beer