I am a mortgage broker who receives more and more short sale leads everyday. I live in Las Vegas and there are so many people that bought their houses at the peak of the market in 2005 with a 2 year ARM which is now adjusting. When they call me to refi they have no equity or are upside down. These are perfect leads for short sales and i am new to the process.
I am wanting to negotiate these short sales for the home owners and of course make money doing that. I am not a real estate agent so i will not be able to charge a comission for selling the house. I might need to even use a real estate agent to sell the homes.
I have heard of investors quick claiming their name on to the title of the home they are doing the short sale on. If i did that, i could talk to my title company and have them add a deed of trust paid to my company for 20K or what ever. When the house sells i would make a profit of 20K or more. ??? If i don’t do it that way, how can i make a comission if i am not the realestate agent and don’t want to buy the house?
Vegas? Are your leads just in Nevada or Socal too? You will need to read up on this forum, join your local reia, and start learning. Maybe buy a course to help you with the process or network with some SS experts in your area, and take them to lunch, offer them some leads for knowledge and start. Good Luck!
Try to narrow down those short sales by HARDSHIPS.
-Active military duty
Also the lenders overall financial condition is also a determining factor so concentrate on S/S with 2nd mortagages. The junior liens fold pretty quickly. :bobble
What do you think about having the owners who are interested in doing the short sale sign a quick claim deed taking them off title and me on? I can sit on the paperwork and not record the deed until I know the house will be able to sell as a short sale so I don’t pay the cost of recording if it doesn’t sell. Before the house sells I would then add a deed of trust for 20K payable to my company. That way I can make some commission on the deal and give some of the money to the old owners when the house sells. ???
My main question is how do I make money on short sales with out actually buying the house? I am not a real estate agent so I can’t make money that I know of, by selling the house to a third party.
What is the main way of making money with short sales when you don’t actually want to buy the property? I want to be able to negotiate the deal for the owner and sell to someone else make some money and get out. Any and all thoughts would be greatly appreciated.
Alright, It’s alot of detail but here is a brief scenario. You can forget about the quitclaim in the state of Florida you have to pay $6 per $1000. At the end that could be very costly. You need to take over the property in a Land Trust. Have the owner fill out the proper docs your attorney approves then have the owner transfer title via assignment of beneficial interest Remember the name of the game is to have no liability. Now you have 100 % control. There is alot of detail with that but speak to an attorney at your local REIA that understands Land Trust.
Now this is the way you make $ You lower the price every week until someone puts a contract on the house. Once you have a benchmark You negotiate with the bank, CONTROL the decision of the BPO and offer the bank a lower price than your buyer’s contract. Try for $60-$65 K the difference you get at closing. Now let’s use numbers to help illustrate.
$400,000 House value
$390,000 Owner’s balance + back payments
$350,000 Broker’s Price Opinion (ie because of repairs and current market conditions)
$340,000 New buyer’s offer contingent on short sale approval
$280,000 Your offer to the bank
End Result $60,000 cash to you at closing :beer
There maybe some other costs involved with the closing but that comes out of your buyers funds.
*Get a title company that does dry closings.
*Out source the negotiations with the bank ASAP that is not the best use of your time.
*Buy a course there are several on this site any many others.
Good Luck, Your gonna need it. :bobble
Dry Closings- Briefly that is when you close your transaction with the old lender with the new buyer’s funds. Sometimes there maybe a delay in between the 2 transactions. Once again ask a title comp. that works with investors to ellaborate.
In reference to your 2nd question basically it can be kind of tricky a new law came about in my area now we have to disclose with the bank what we are actually doing. That’s ok because I have the solution. I think in your case you might have to ask an attorney in your area. Understand you have to abide by the law in every sense of the word. But in every case there are loopholes, I know what has to be done over here. Once again check with an atttorney that deals in foreclosure defense. The last thing I want you to do is get yourself in trouble.
Another way to get into this quickly while you learn is to work with a third party loss mitigation company. Whenever you run into those defaulted mortgages, you take a quick application and send it in to a national company who does all of the negotiating for you with the bank. Everyone wins. You make a commission on the loss mitigation fee, the homeowner keeps their home and the bank is getting their money. I feel it is the karmic foreclosure method. :biggrin
This is all great in theory, but I’d like to see it actually happen. Lots of people would be breaking laws if this happened. First the fake BPO, do you think an agent is going to risk his license on a fake BPO for $50? Well maybe a shady one, but the work typically isn’t even worth what agents get paid to do them.
Basically lots of risks with short sales. I think the bottom line in the above scenario is that the banks won’t approve the short sale. Some other reasons are that the banks guaranteed a certain percentage of the loans won’t go bad or won’t go into modification or rework. If it does, they have to buy them back. It’s actually cheaper for them in those instances for it to go into foreclosure rather than rework the loan. Also the short sale department and the foreclosure department work at different speeds, while you’re working the short sale, the property could end up being foreclosed on right before the sale date. Read some other real estate forums, lots of agents hate working short sales because it’s a lot of work, chances of getting paid are slim and sometimes the bank wants to rework your commission.
Anyway, there’s lots more wrong with this scenario. Other items are that banks typically require multiple BPO’s just so that you don’t “control” the BPO. The banks are not fools. Sometimes I think the people who write these make more money selling the books and the seminars than are actually made in these types of deals. Actually I think that’s probably true. Carlton made more money with seminars that he actually did in real estate.
In response to your statement I would agree with you not all banks short sale houses. I never said they did. It is alot of work but the payday can be lucrative remember nothing worth having comes easy. I understand Realtors don’t like to work hard that is why some ar working at K-mart, and department stores to supplement their income and that’s OK nothing wrong with that.
In reference to the BPO when I say “control” what I mean is that you have to educate the Realtor properly. I personally take pictures of repairs that the house needs climb on the roof go the extra mile to get a better picture of what I got. A realtor is not going to do that for $50 you know that. Besides they work hard enough with 42 listings. There is no mystery that properties have lost value but you have to make sure the Realtor knows that and showing the DOM of other properties of like kind is something else. In no way shape or form am I saying to show something fake remember 2 sets of eyes are better than 1. I can tell you are frustrated at this market and buisness but real estate investing is not for everyone big guy. You got to keep it together. There are people that make alot of money on books tapes and seminars, but I am not one of them, but thanks for the idea I’ll consider it. The education you get from them is paramount there are alot of savvy investors out there and there is nothing wrong with that, but I will bring this to a close, so keep your head up smile God loves you. You will sell a house one day again.
You may want to consider using a Short Sale outsourcing company. One good one is LMS out of Cleveland. They will show you how to structure the deal so you can get a piece our of the middle and will JV the deal with you. Check them out and if you can’t find them let me know and I will hook you up.