Short Sale Secrets

Short Sale Secrets Building your Case & Closing Arguments

Building Your Case – Learn how to find deals, put together your packages with the banks, have the crucial conversation that will 'make or break' your deal, how to pin down loss mitigation, how to handle the bank's inspection, getting the deed, and more.

Closing Arguments – When the bank says no, there is still work to do. Learn how to place your second and third offer, how to delay the foreclosure, how to give the homeowners money, dealing with bankruptcy, 1099 and deficiency judgments, when the first makes the second take zero, and so much more.

Short Sale System

All the tools you need for successful short sale investing!. This system is complete with step by step instructions, sample short sale deals and advanced concepts to keep you on the cutting edge of success.

Frequently Asked Question on Short Sale

When investors find out we specialize in short sales, they always have so many questions. Here are the answers to some of the most common. Hopefully, these answers will give you a better understanding of a short sale and how to do one.

WHY DO THE BANKS SHORT SALE?

* The mortgage is in arrears or foreclosure.
* The property is in poor condition.
* The homeowner has hardships and cannot afford the payments.
* New homes in the area are being chosen over existing homes.
* The area or neighborhood has depreciated in value.
* The bank's shareholders are concerned when there are too many defaulting loans on the books.
* Some banks are required to prove a loss each month... let's help them out.
* Some banks are required to have an amount equal to or up to six times the retail value of each REO "on hand" - ouch, that hurts.
* An REO is a liability, not asset. Too many liabilities will cause any business to go under if not dealt with quickly.

CAN I SHORT SALE A NICE PROPERTY?

Absolutely! As you can see, banks short sale for many reasons other than the poor condition of the property.

WHAT STEPS DO I TAKE TO COMPLETE A SUCCESSFUL SHORT SALE?

1. Find a property owner in distress.
2. Put a deal together with the homeowner.
3. Have the homeowner sign an authorization to release form.
4. Fill out a sales contract for the amount you want to offer the bank and have the homeowner sign it.
5. Call the Loss Mitigation department at the bank.
6. Fax them your offer along with the following:

* 1. Your cover letter explaining why you can't offer full price.
* 2. The sales contract.
* 3. Justifying comps of the area.
* 4. Pictures, if you have them.
* 5. A net sheet or closing statement (a sheet that shows the bank exactly how much they will net after closing costs, taxes, etc. are paid).
* 6. A hardship letter from the homeowner that mentions the dreaded word.... bankruptcy.
* 7. Estimated list and cost of repairs, using retail repair prices that the normal homeowner would pay for these items.

WHAT HAPPENS TO THE HOMEOWNERS CREDIT?

When you negotiate a successful short sale, keep in mind that the agreed upon price is payment in full. However, the homeowners may still owe the difference between the mortgage balance and the discounted amount via a "deficiency judgment." If granted, this judgment will affect the homeowners and their credit report just as any other judgment. You must get the bank to agree to accept "payment in full without pursuit of any deficiency judgment."

In addition, you need to explain to the homeowners that the discounted amount (the difference between the mortgage balance and the short sale) may be declared as income on their income tax return by means of a "1099." The homeowners can speak with their accountant for advice. Since the homeowners have been in such duress and probably haven't made much income, a 1099 may not adversely affect them.

We hope this sheds some light on short sales. As you know, nine out of ten deals have no equity. To be successful in this business, trends call for you to be a short sale expert.

Short Sale Fuss

What is all the fuss about short sales? Everywhere you turn, there is another seminar, another guru, or another boot camp all teaching the same thing. Can so many people be right? How many different ways can there be to do the same thing? Folks, believe it or not, there are not one hundred different ways to do short sales, there is only one. What you have is people trying to put a spin on it to seem original. My partner and I were the first to bring this topic to the forefront. It is very exciting for us to see how this incredible topic has exploded in the last few years. I am going to review the short sale concept and show you just how easy it actually is. My students and I have done hundreds of short sales. If you will do what we do, you can expect the same incredible success.

A short sale is simple: Through simple negotiations you get the bank to accept less than what is owed as payment in full on a property. For example, you find a homeowner with a property worth $100,000 that has a $100,000 mortgage balance. You work with the bank to negotiate a discount on the payoff. The bank agrees to accept $50,000 as payment in full and you have just completed your first short sale.

Is it really that simple? You bet! The key to successful short sales is to understand the mindset of the people involved and make the deal appealing to each person. There are basically three parties involved in a successful short sale: the homeowner who is interested in getting out of foreclosure, the bank who wants to get a bad debt off its books, and the rehabber who wants a great property to fix-up and sell retail. In each situation, we strive for a win/win outcome.

Let us start with the homeowners. Their motivation is obvious. They are behind in payments or already in foreclosure. Creditors, banks, attorneys, mortgage broker's and more everyday, are calling them. They just want to sleep at night and get out from under the stress of this situation. Their downfall: they have no equity. They have called every investor in town and have been turned down by everyone because they have no equity. They call you and you say, "No equity? No problem!" You explain the short sale concept, get the property under contract, and get busy.

"Why would the bank accept less?" you ask, "The bank can just take the property back at the sheriff's sale and then retail it." Well, let me ask you this: do banks want to lend money or own homes? Correct, lend money. Is a foreclosure an asset or a liability? Right again, a liability. Folks, banks are in the business of wholesaling money. They borrow money from bigger banks and then lend it to you. They have to show their credit report, just like you do, to get a low interest rate on the money they are trying to borrow. If you were going to lend millions of dollars to a bank, would you lend your money to the banks with the low default rates or the banks with the high default rates? Right again, you would lend to the banks with the smallest number of defaulted or foreclosable loans. The banks motivation to accept a short sale is to clean up its books so that it can borrow more money, at a cheaper rate, and then lend it to you for more.

Were does the rehabber come into play? You have to have someone to sell your properties to once you negotiate a successful short sale. Rehabbers are the perfect outlet. Rehabbers like to purchase fixer-uppers at 65% of the retail value. In the case of the $100,000 property, a rehabber wants to buy it for no more than $65,000. In order for this to happen, you must get the bank to say yes to your offer.

So, how do you get the bank to say yes? You build a great case. Think of it like an attorney defending a case. The better case you build, the better your chances are to win. I send as much information as I can to the bank to show the bank why it should accept my low offer now instead of waiting out the foreclosure and bankruptcy process and getting the house later.

How do you build a good case? Send: a sales contract, signed by the homeowners, for the amount you want to offer the bank; an "authorization to release information" form; low comps; bad pictures; a detailed list of repairs; a hardship letter written by the homeowners - backed up with proof such as late notices, shut off notices, bank statements, job layoff papers, medical bills, tax returns, or whatever you can find; a crime report; a list of sex offenders in the area; articles from the newspaper that negatively reflect the area - job layoffs, crime, natural disasters, foreclosures up, bankruptcies up, and whatever you can find that is detrimental to the neighborhood; net sheet; and a cover letter from you stating why you couldn't possibly pay full price for the property.

Submit that information to the Loss Mitigation department of the bank and you are in business. The rep will negotiate with you and once you settle on a price, wholesale the property to the rehabber. You become the middleman and make the difference between what you negotiated with the bank and the price the rehabber is willing to pay.

Folks, short sales are that easy. There are millions of dollars being left on the table. Get busy and put some of it in your pocket. Good luck! For more information on short sales, please contact me at www.1234closures.com