Real Estate Information |
|
Negotiating A Short Sale - The High Road to Huge Foreclosure Profits
Buying foreclosures can be extremely profitable for real estate investors. However, most of these homeowners are mortgaged to the hilt. They have no equity, and big loan payments. In fact, many actually owe more than the property is worth! Most investors will walk away from these deals because they see no obvious profit. However, you can "create" your own equity by negotiating a "Short Sale" with the bank or lender. What is a Short Sale? The concept behind the short sale is simple: your goal as a real estate investor is to convince the bank to sell for less that is owed as payment in full. Of course, this concept is easy - buy the foreclosure from the bank at a big discount, sell the real estate, and make money! How to Negotiate the Short Sale with the Mortgage Holder Once you have your secured a contract with the homeowner and have your paperwork in order, you'll be ready to deal with the loss mitigation department of the bank. Short Sales success relies on dealing with the loss mitigation department at the bank. Although most lenders look at short sales as a necessary evil within the lending industry, that doesn't mean that the bank will just roll over and do your bidding. Understand the Bank's Perspective With foreclosures at a 52-year high, the loss mitigation department at the bank is busy, if not highly overworked. Turn this disadvantage into an advantage - sell them the benefits of your short sale. Short sales contracts help lenders unload unwanted property and spare many expenses associated with the foreclosure process. These expenses include, but are not limited to, court costs, bankruptcies, repairs and marketing. This is in addition to the $300,000 to $800,000 (or more!) normally held in reserve by lenders. Federal regulations require this reserve, which is usually many times over the actual price of the bad debt. As the investor, keep these benefits at the top of your mind. After all, it's up to you to convince the lender that cutting their losses short is the best option. It's time to hone your negotiating skills. Here are 3 Steps to help you out. Step 1: Have Your Paperwork Ready There is paperwork that all lenders will require in order for you to submit your offer for the short sale. Second, many of the larger institutional lenders have their own short sale package (their own forms to be filled out and signed). Since many of these forms have to be signed by the homeowner(s), it's best to have them with you when you meet with the homeowner to work out a deal. At a minimum you should have the homeowner fill out and/or sign: · Authorization to Release Information (homeowner's permission for the bank to speak to you) · Purchase and Sale Agreement · Hardship letter (showing why the homeowner can't make the mortgage payments) · Financial statement (showing the assets, liabilities, incomes & expenses) · Estimated HUD1 or Net sheet (showing the bank what they will get) Second, find out if the lender has a package they want completed. You can do this usually by calling the lender and asking them to fax you the package. Get the lender information from the homeowner in a phone call, so you can get the package before you go out to the house. Step 2: Approaching the Loss Mitigation Department: One of the first challenges you'll face with the bank is getting your call to the right person. Some banks have systems set up in a way that when you call put in the homeowner's account number, the call transfers to the appropriate department. If the bank doesn't have a system like this, call around to find the Loss Mitigation Department. Many banks have different names for this department, so you may spend some time getting bounced around. Other names to try out are "foreclosures department", "short sale" department, or "loan modification" departments. Make sure you introduce yourself and be nice, polite, and patient when you reach the right person. This is the person that can make or break your deal. It's helpful to have some form of a script in front of you to get the conversation. When you speak with them, make sure you cover the following: · Introduce yourself. · Name the homeowner, the account number, and the fact that you represent them. · Ask for the fax number. · Let them know you're faxing over an "authorization to release information" so that the loss mitigator can talk to you. · Stay on the phone as you fax this information. · Explain to them that you're interested in a short sale. Once they have the paperwork in front of them, the negotiations begin. Step 3: Begin Your Negotiations Every bank has its own personality and approach when it comes to short sales. Some teach their employees to at least show resistance up front. One reason for this is that many investors call them expressing interest in a short sale, with no clue how to do it! These loss mitigators usually have about 80 to 300 files on their desk. They just don't have the time or desire to teach you! Let them know you don't need them to! Many new investors have been advised to not reveal that they intend to invest in a property. However, it is better to be upfront and let them know that you are an investor, and you are buying the property. Being honest and upfront allows both parties know what is required of them, and what needs to be negotiated. While speaking with a loss mitigator, make sure to emphasize the following points: 1. You're an investor and you know what you're doing. Although you do want to make profit, let them know you're not out to steal the property from them. 2. You understand that they are busy and appreciate the valuable time they are spending to negotiate with you. Find out what will make it easier on them. 3. Remember your selling points. The bank wants to avoid the homeowner filing bankrupty, and the bank needs to unload unwanted property without taking a huge loss. (And yes, while you are in it to make a profit, you're not trying to rip them off! You're just trying to use your expertise to do what you're good at.) 4. A short-sale is a win-win situation for everyone! Once you have spoken to the loss mitigation department and given them your paperwork, the lender will need information about the property, the borrower and the deal that you are proposing. If the person you are speaking with tries to test your resistance, make sure you answer as many questions as thoroughly as possible to let them know you are a professional. Hang in there, answer and ask as many questions as possible, and they'll be more apt help you out along the way and walk you through what it is that you need to do. The most important fact that the broker needs to know is: How much is the property worth? Banks usually hire a real estate broker or appraiser to evaluate the property. This is called a broker's price opinion or "BPO". The BPO is one of the largest hurdles you need to clear when perfecting your short sale negotiations. In the next article, you'll learn the in's and out's of the BPO and how to negotiate the BPO down to create profit for your short sale. Richard Odessey along with his wife Michelle are founders of the premier site on the internet - http://www.InvestorWealth.com for training and teaching real estate investors to do high profit deals. They offer regular Free Teleseminars by the top real estate investors in the country and offer how-to tools and kits like the Deal Evaluation Tool (http://www.1shoppingcart.com/app/adtrack.asp?AdID=143414) to help investors to faster and greater real estate success. They also offer 4-8 hands-on training seminars with personal advice from experts that investors can take from the comfort of their home. Richard and Michelle have been investing for over 5 years and personally teach and mentor other investors. This article may be reproduced in its entirety only if unaltered and the resource box is included.
MORE RESOURCES: Real estate transactions top $4M for Jan. 9-15 Steamboat Pilot & Today Aspen Real Estate Snapshot Jan. 20, 2025 Aspen Daily News Real Estate Transactions, Jan. 20 edition Hopkinton Independent These 8 charts show what bubble-spotter Ivy Zelman thinks will happen in the US real-estate market after the least affordable year since 1984 Business Insider Barron Trump business partner clarifies future of luxury real estate venture: 'Will not be relaunched' Fox Business The U.S. Government Has a Landlord, and Trump Isn’t a Fan The Wall Street Journal 1-21-25 *INTERVIEW* The Denver Area Real Estate Market Expectations for 2025 with Ed Prather iHeartRadio Australia’s Clayton Utz Takes Real Estate Partner from Ashurst Law.com International New report predicts rough 2025 for Las Vegas Valley residential real estate Las Vegas Review-Journal RioCan Real Estate Investment Trust Announces Offering of $550 Million of Senior Unsecured Debentures Business Wire Barron Trump following in dad Donald's footsteps as he prepares to launch luxury real estate venture Hindustan Times In addition to its new Delano office, this firm is now opening on the west side, too - Wichita Eagle Decoded: The ‘behind-the-scenes demands’ over Clear Cooperation Real Estate News Real Estate Property Sales filed filed Jan. 8-12, 2025 Fauquier Times Real Estate Transactions | 1-15-25 The Republic-Times The Next Big Thing: Market Trends 2025 to explore the future of Southwest Florida’s real estate market on March 20 Priority Marketing Barron Trump reportedly following in father's footsteps, launching his own luxury real estate venture Fox Business Anywhere Real Estate’s Charlotte Simonelli on navigating 2025 with financial discipline and the help of AI HousingWire Accurately analyzing the local real estate market Bitterroot Star Kirkley offers 2024 DeSoto County real estate market trends and 2025 outlook DeSoto County News Canadian Real Estate Firm Opens Devenir Construction to Local Self-Storage Developers, Owners Inside Self-Storage Enterprise Community Development Names Zachary Marks as EVP, Head of Real Estate Development citybiz APCO's Camarco Handles Bain's Real Estate Deal O'Dwyer's PR News How Northeastern students are redefining real estate with purpose and perspective The Huntington News Brown & Riding names Lally real estate practice leader Re-Insurance.com FINE PRINT Real Estate Brown County Democrat Revolve Real Estate, for all your real estate needs PAHomePage.com Chicago real estate brokers accused of discriminating against housing voucher holders Crain's Chicago Business Central Texas real estate agent shares insight on the 4,000+ homes sold in Bell County in 2024 25 News KXXV and KRHD Real Estate Transfers Fairburyjournalnews Radio Real Estate 1/18/25 My Bellingham Now Americans Can Easily Buy Real Estate in These 8 Countries House Beautiful Energy Value: A New Imperative in Assessing C&I Real Estate Microgrid Knowledge A horse-lover's haven in Middleburgh - Real Estate Roundup The Daily Gazette Barron Trump launches real estate company as father Donald reclaims US presidency The Times of India Texas Permanent School Fund adds to $250m real estate IPE Real Assets Real estate transactions recorded from January 0-13 Americus Times-Recorder Redfin Welcomes December Agent Hires Redfin News Drake Lists Beverly Hills Estate for $250K a Month While Expanding Luxury Real Estate Empire The Source Magazine LA fires spark a call for real estate ‘unity’ Real Estate News January 14-16 Gulfport Real Estate Sales The Gabber Newspaper West coast real estate firm acquires first Valley property in Tempe Daily Independent These Trump executive orders could impact real estate The Real Deal Hernandez Development, XSITE Real Estate close on site for future Deer Park self-storage facility REjournals.com Undercover sting exposes rampant housing discrimination across Chicago area, watchdog group says WBEZ Chicago Lange Real Estate expands residential development with new teams, office The Business Journals Pinellas Beaches Real Estate January 14-17 The Gabber Newspaper Barron Trump's luxury real estate business 'teased with five word statement' from friend The Mirror US Inside the Gaza Deal: How a New York Real Estate Developer Took on Netanyahu and Hamas The Wall Street Journal 'It's going to hurt': Real estate expert discusses how Trump's deportation plans could affect housing Yahoo Finance 10 Years In Prison For Former Real-Estate Attorney Jersey Shore Online Bill Ackman Offers $1B For Real Estate Giant Howard Hughes To Emulate Berkshire Hathaway Yahoo Finance Resilient California Housing Market Defies Challenges in 2024 Norada Real Estate Investments Barron Tower? Trump’s Youngest Son Follows Father’s Footsteps, Set To Relaunch Real Estate Company Hindustan Times How the Fires Will SEVERELY Impact L.A. Real Estate, According to Celebrity Agents - House Beautiful Top Real Estate Agent in Kirkland, WA, Honored for Advocacy and Leadership at Annual Realtors Gala openPR FGE says no protection for Dispossession Cartel that illegally seize real estate - Riviera Maya News |
RELATED ARTICLES
Questions Investors Should Ask When Buying and Selling Investment Property If you're a real estate investor, here are several questions to consider when looking at investment properties. Providing sound answers to these questions will greatly increase your profits:Why do homeowners sell for bargain prices?There are many factors that can prevent owners from being able to maintain their homes. Bubble, Bubble, Toil and Trouble? We are selling our house. We have lived here for 15 years, the longest I have ever lived anywhere; of the places since I left my parents' home I think my previous best was three years. Home Owners: Disclose the Facts! One of the most common causes for disputes occurring after the sale of a home arise from the buyer finding defects in the property, defects which were not disclosed to him by the owner before the sale of the property. If you are the owner of a home that you are looking to sell, please be aware that you may be held liable for not disclosing any known defects in your home. Home Hunting and the Internet So, it's home hunting time. Where do you start? Who do you contact? Well, home hunting has been made much easier with the advent of the Internet. What To Expect From Your House Appraisal Having your house appraised can be a scary step in the moving process, especially if you don't know what to expect. Will your house pass muster or will they find some hidden defects and problems lurking in the basement and attic? Should you scrub the house clean?Don't worry - this isn't a test of how clean you keep your house or even if your house has problems (that will be for the home inspector to find out). Real Estate Negotiation Secrets When you bought your home, you offered less than you were willing to pay, right? That's the most common negotiation technique. For experienced investors, however, that's just one little secret among the many more powerful ones. Helpful Hints for First-Time Home Buyers Buying a house can be a daunting task, even for someone who has owned several homes. My husband and I recently purchased our first home together, and it was hard to find good advice that we truly found useful. What are the Elements in Real Estate? Each element has a specific color associated with it. Because color (light) vibrates and is such a high frequency, it immediately lifts the "energy vibration" in our listings. Real Estate Internet Marketing Is The Way To Go Real estate Internet marketing is a booming business, along with all other forms of Internet businesses. Now, it seems that very little can't be sold over the Internet. Buy FHA HUD Homes FHA HUD homes are those dwellings that have been acquired by the United States Department of Housing and Urban Development (HUD). The HUD oversees the Federal Housing Administration (FHA), which offers federal insurance on home mortgages. Dealing With Dual Real Estate Agents Historically, real estate agents have represented the seller of a property. The seller, after all, is usually the one who pays their commission, and agents therefore have a fiduciary relationship with the seller. Is Housing and Real Estate Bubble Hype Irrational Exuberance? Not so, says the author of this article and four real estate books including the recent "1001 Tips for Buying and Selling a Home". The upside of the hype is for real estate consumers and investors. Personal Debt Can Disappear When You Set up a New Business I teach students how to set up a new business name on paper and then move their personal debt into the business name.This will dramatically improve your personal credit score and help you make money as a real estate investor. Master Builders Ask, Do You Know What Design/Build or Design/Construct Means? You Should These real questions are answered by me and US Master Builders after receiving them from readers of my e-book, "Residential Development Made Easy."Question 1. Invest In Real Estate - But Where? Where should you invest in real estate? If you know an area well, and have enough experience investing in real estate, you can make money almost anywhere. However, there are always places that are better or worse for real estate investments - places that have a better demand/supply ratio. How Real Estate Investors Use Mortgage Note To Purchase Properties Many of you may not be aware of the various ways notes can be used. The average person's understanding about notes is that people create them because they are desperate to sell a property. Customer Service - The Real Estate Revolution Traditionally, real estate has been viewed as a sales industry. But perceptions are changing. The Real Estate Bubble Fallacy There has been a lot of talk lately about the "Real Estate Bubble", and a lot of folks are asking the question: "When it is going to burst"?They are saying that the market just can't sustain this level of growth and appreciation much longer, and I heat them say that it is inevitable that it must come crashing down soon. People are worried. Find Out If There Are Sexual Predators Nearby Before You Buy A Home or Property! When looking for a new home or property, buyers ask many questions. Typical questions might be about the history of the property, property tax amounts, the school system, proximity to medical facilities, shopping malls, etc. Buying a Home -- Is a Home Inspection a Good Idea? To avoid "buying a pig in a poke," buyers have long demanded the closing on a home purchase be contingent upon a satisfactory inspection by a home inspection firm. In many parts of our country, we're now experiencing a strong sellers' real estate market and sellers often receive more than one purchase offer on the same day for their home. |
home | site map |
© 2006 TIGER MEDIA |