Short Sale Questions

Foreclosures, Short Sales, Tax Foreclosures
1

I’ve been reading up on short sales the past few weeks and still have a few questions

• Not including marketing and travel costs, can anyone give an estimate as to how much money is usually laid out during a short sale (do you pay for comps, rehab estimates, title search, deposits, etc?)
• It is in my best interest to perform the short sale using a separate entity, correct? Do banks have problems with this?
• Banks don’t allow you to assign short sale contracts, correct?
• If I plan to do a double close on a property, will a seller/bank usually require me to show proof of funds? If so, what are ways to deal with this?
• Is there any “lag” risk? For instance, if I sign a P&S contract with a seller (subject to a short sale), unpaid mortgage payments and additional fees will continue to accrue and the bank is owed much more than when you first signed with the seller. How do you ensure that these accruing fees don’t make the deal unprofitable? Is this part of the negotiation with the bank (negotiate that anything above X, including newly accrued charges, will be written off)
• The book I read focused more on shorting only the second mortgage and paying the first mortgage in full. Is this how most people do it? From what I’ve read on message boards, it looks like most investors try to discount BOTH the first and second mortgages.
• Does anyone have a suggestion for a simple website template? All the REI templates I’ve found online seem pretty expensive for a basic website.
• One other major question is about building my buyers list. The REI club I joined meets once a month, but the last couple of meetings have been cancelled. Can anyone suggest good ways to build a good buyers list without spending too much money?

As you can tell from most of my questions, keeping costs down is one of my primary concerns. I know I will be spending money on marketing, but I’d like to keep other costs down as much as possible.

2

This question tells me you need to read more books young Skywalker.

Ready for the battle are you not yet.

3

Can you elaborate further…obviously I’m mistaken in some way. The book I bought (Short Sale Magic) actually looked like it would be pretty good, but ended up being 90% useless. The author stays vague in many ways, but throws in plenty of plugs for his mentor services.

Any comments on the other questions? Also, does anyone have another short sale book they would recommend?

4

Do a search for Dwan Bent-Twyford, she is a short-sale “expert” and has covered them A to Z for many years before she hit the seminar circut and now mostly sells her books and tapes like most of them do.
That being said, she is very knowledgeable on the subject and I learned more from her than I did from anyone else I read up on about short sales, so her info and experience might help educate you more as well.

PS. I wasn’t impressed with Tom Butler’s book either. It was alot of generalizations and not much substance. He talks about how to do it but doesn’t actually ever explain how to do it. He baits you just enough to want more info and to buy his coaching course. I thought, like all the other “guru’s”, that his sales lettter was the high point and the book just didn’t deliver what the sales letter claimed. Imagine that!

5

That wasn’t the point of my reply.

The fact you only read one book means you still know next to nothing, even if it was a good book.

The more you read, the better prepared you will be, but the only way to learn how to do it, is to do it. Look at your own signature.

You should join your local REI club, they’ll be able to offer you specific advice, especially about local legal matters.

But the best advice is to find a house, find the homeowner, contact the bank, and figure it out as you go. No two deals are the same, so however many books you read, you’ll always get a surprise.

The battle isn’t about learning, the battle is about getting the first one done, after that it gets easier every time.

Read the next post, I’ll answer the questions so this doesn’t get too long.

6

• Not including marketing and travel costs, can anyone give an estimate as to how much money is usually laid out during a short sale (do you pay for comps, rehab estimates, title search, deposits, etc?)

It varies, but you will need to pay for some of them at some point in every deal.

• It is in my best interest to perform the short sale using a separate entity, correct? Do banks have problems with this?

Not usually, they only want the money.

• Banks don’t allow you to assign short sale contracts, correct?

Correct

• If I plan to do a double close on a property, will a seller/bank usually require me to show proof of funds? If so, what are ways to deal with this?

Not necessarily, but if they do, get a pre qual letter from a hard money lender. Most of them will do it, and you don’t have to take the loan.

• Is there any “lag” risk? For instance, if I sign a P&S contract with a seller (subject to a short sale), unpaid mortgage payments and additional fees will continue to accrue and the bank is owed much more than when you first signed with the seller. How do you ensure that these accruing fees don’t make the deal unprofitable? Is this part of the negotiation with the bank (negotiate that anything above X, including newly accrued charges, will be written off)

You can ask the bank to freeze the account, they might, they might not. Do the math, if it doesn’t work with the extras, walk away.

• The book I read focused more on shorting only the second mortgage and paying the first mortgage in full. Is this how most people do it? From what I’ve read on message boards, it looks like most investors try to discount BOTH the first and second mortgages.

Then what you read on the message boards would appear to be correct.

• Does anyone have a suggestion for a simple website template? All the REI templates I’ve found online seem pretty expensive for a basic website.

Do a google search, but from the way you’re talking, expensive would appear to mean anything above free.

• One other major question is about building my buyers list. The REI club I joined meets once a month, but the last couple of meetings have been cancelled. Can anyone suggest good ways to build a good buyers list without spending too much money?

Buy Dwan’s book, it’s got some good stuff in it.