Sell My Short Sales

If your in the short sale game you know how important it is to handle the BPO process. If that BPO comes in too high it’ll kill your deal on the spot. But does that mean that you “trick” the BPO agent into seeing things that aren’t really there?

I don’t know about you, but somehow that just doesn’t sound right. Short sales are already a very sensitive transaction without going around advertising that you’re using “Jedi Mind Tricks” to influence the BPO agent. Your not trying to trick anyone into anything when doing the BPO.

So, how do we get around this issue? I’m going to give you a BIG tip. You can thank me later. No one that I know of uses this technique except for our team. What you do is pay for a professional appraiser to appraise the property based on comps of homes that are active, pending, and sold. The BIG tip comes from where you get your Sold comps.

Most people use the sold comps they find on the MLS, Zillow, or Realtor.com. What we use are the sold comps of homes that sell on the courthouse steps during the Trustee Sale. Brilliant, isn’t it? They are true sold comps but have sold anywhere from 20% – 30% below market value.

I just did the numbers in one of the Cities that I just finished my BPO on. There are 70 active listings. 32 of those listings are Short Sales. 31 Homes have sold in the last month. Only 5 of those sold homes were short sales. Stats don’t look too good for short sales, do they?

So, based solely on those number only 16% of short sales are selling. What happens when they don’t sell? They go to auction! Our team believes it’s very important to bring these sales prices to light since they aren’t available on the MLS. We do some digging but prepare a pretty awesome package for the BPO agent with true, honest comps without having to Jedi Mind Trick nobody.

Popularity: 19% [?]

It looks as though the goverment is trying to add more incentives for lenders to start pursuing short sales more aggressively. Taking the new foreclosing numbers into consideration the banks should take this incentive and run with it.

According to the Treasury Department, $10 Billion Dollars of government money will be directly available to lenders to aid in loan modifications, costs associated with doing short sales, and to catch up with all the delinquent payments. The funds will only be distributed to those lenders who agree to get rid of the bad assets from their books through short sales over any other method.

Although the details of the aid haven’t been finalized the 3 most important incentives for lenders are:

1. Extra $1,000 to lenders who agree to a short sale

2. Buyers will receive $1,500 towards closing costs and fees

3. 2nd lien holders will receive $1,000

There’s no doubt that the $10 Billion Dollar aid will entice the lenders to cooperate with short sale filings but the change also needs to come from within the Loss Mitigation Departments to expedite the processing of these deals. I think this is a great first step towards trying to untangle the massive web of foreclosures but will it be enough to prevent another real estate crash from happening?

There were 937,840 new foreclosure filings this quarter, a 5% increase from last quarter and a 23% increase from the third quarter of 2008. This doesn’t even account for the 7 million foreclosure homes that haven’t hit the market yet and the foreclosures that are about to happen from the new unemployment.

It’ll be interesting to see how this will all unfold.

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Well, not quite that drastic. Thankfully, Governor Schwarzenegger just signed Senate Bill 94 into law yesterday. The Bill’s measures were to prevent loan modification companies from taking up front fees from homeowners who are in distress in return for modifying the terms of their loan. These companies were charging up to $4,000 for their services.

Now, don’t get me wrong, I’m all for being compensated for your work. I just don’t agree that these companies should take an up front fee from homeowners who are already in distress and can’t make their payments. Why? Because the finance industry is always filled with shady scammers and greedy, blood sucking leeches… it’ll always be that way.

I know for a FACT that there are hundreds of loan-mod companies our there that have charged and taken this fee from the homeowners even though they knew that they wouldn’t qualify for the modification. How do I know this for sure? I know when the mortgage industry crashed, all those scummy Mortgage Broker douche bags that were making hundreds of thousands of dollars per month (yes, I said Hundreds of Thousands of Dollars) went straight into the loan mod business to re-create the same thing.

So, obviously we’re not talking about the “Lending Giants” crashing, but I do believe there will be a wave of short sales and foreclosures to come in the near future from all the defaulting loan-mod homeowners. Imagine that, they paid $4,000 to prolong the inevitable.

I keep reading blogs and articles from attorney’s (Like their the most honest people in the world, right?) and loan mod companies complaining that they can’t provide a service if they can’t get paid for months. If they were at least half-assed sincere or dedicated to their work and not out for the quick, short term buck they’d stop their bitchin’ and whinin’ and get to workin’. At least the Governor saved you by vetoing Assembly Bill 764 which would’ve banned companies from collecting ANY fee if the loan mod didn’t go through successfully.

Obviously I’m not saying their all Von-douchebags… I’m just saying some are, some aren’t, so what. I see my business booming but I’m not taking an up front fee from anyone, and sometimes we don’t get paid for up to 6 months! Try THAT for bitchin’!

Popularity: 15% [?]

Everyone seems to be scrambling to find some kind of niche in this crazy real estate market of ours. Sure, trying to get shrot sales sellers on your marketing is awesome but all that marketing on your own can be a nightmare! Postcards, yellow-letter mailers, prospecting, FSBO, expireds, door knocking, networking, Chamber meetings, the list goes on and on… PHEW! So if you’ve done all the above and still struggling to get some business in the door here’s some information for you to Niche This market and get more short sale leads (and possibly other leads)

What Market? The Divorcee’s!

With over 50%…. Yes, I said 50%, of couples in America getting divorced it’d be crazy not to consider working with this niche group. If you know what your talking about and know how to handle this sensitive situation you’ll be the go-to Realtor or Investor for divorce attorneys, CPA’s, Lenders, Family counselors, etc.

I came across this class that’s being sponsored by Exit Realty (No, I’m not making a pretty penny from this so relax!) and wanted to share the wealth and help others grow if that’s your wish. Learn all you can from this class and begin networking and cultivating the necessary professional relationships so they can begin sending you all the biz you can handle. I know how important it is to find a niche and this may be an ever-growing, market resistant problem that we can grow with. Plus, you’ll probably get a ton of short sale leads as well! I’m obviously going, hope to see some of you there too.

Popularity: 7% [?]

I actually took this post from my Activerain blog and decided to repost it. We have Realtors that read this blog and just wanted to lend some information that could be a great benefit to them if they’re struggling.

If your an active Realtor you know how tough its been to stay afloat these last few years in the business. If you’re still struggling to get a handle on your finances there may be hope. Realtors and Brokers can apply for federally backed loans through the SBA. This is great news at a time where real estate professionals are “struggling to find money for day to day expenses, debt service, capital, and funding for expansion.”

Let’s take a look at 3 SBA loans that are most relevant to real estate professionals and how these funds can be used.

1. ARC (America’s Recovery Capital): No- interest, no-fee, deferred payment short term loan. The ARC loan can loan up to $35,000 to small businesses that need capital to ride out the wave of uncertainty until the business can return to profitability. You can use this money to pay existing debt including credit card debt, if the debt was used for business expenses. The loan is available until September 2010 or until the funds are available.

2. Section 7(a) Guaranty Loan Program: With this loan you’ll have to apply with a participating private section such as a bank. You can use this money for working capital or debt replacement. Loan limits are up to $2 million and is intended for long-term needs rather than emergencies. The SBA will guaranty this loan up to 90% from payment default by the borrowers.

3. Section 504: This loan is intended for long term, fixed rate financing for fixed assets such as buildings and land. It’s great for Brokers who are expanding their business or for offices who are branchign out. Section 504 will loan up to $1.5 Million.

If you want more information please visit www.SBA.gov. Now “Go Get Your MONEY!”

Popularity: 11% [?]

So this particular short sale deal I’m working on has been very tough on the seller. He has a family, young kids, and his business has been dragged down by the economy and he can no longer sustain their mortgage payments. I absolutely hate stories like this.

Thank god I don’t have kids yet. I had to forelcose on one of my homes and short saled 2. I personally understand how tough it is and really can’t begin to imagine the amount of burden on someone who has to take care of 2 young children. When I see him I can see the pain and frustration in his eyes. He was turned down for a loan mod and this is his best chance of avoiding foreclosure and no matter how calmly and soothingly I explain that this is his best option, I know he’s thinking about Christmas and the prospect of having to move around that time period.

Homeowners aren’t allowed to receive any proceeds from the close of the sale. But who says that you can’t purchase something from the homeowner? He has this pool table that he wants to give away. I’m going to draft up a “Bill of Sale” in exchange for his pool table so he can cover his moving expenses, first and last months rent, and a nice Christmas tree and some presents for his little ones. I haven’t told him yet. Real estate is never stable and I hate promising on something that I have no way of knowing if I can deliver for certain. Besides, I want to tell him in person just to experience the look of temporary relief in his eyes.

BPO is scheduled for this Thursday and we should close before Christmas on this one. Probably the fastest BPO EVER!

Popularity: 10% [?]

A short sale in real estate is not always easy transaction.

There are many ways to lose your property, but signing away ownership in a manner that destroys credit, embarrasses the family and strips an owner of dignity is one of the hardest. For owners who can no longer afford to keep mortgage payments current, there are alternatives to bankruptcy or foreclosure proceedings, and it’s called a “short sale.”

Many agents say “that  half their sales in Los Angeles County over the past few years are short sales.” “Short sales are the norm now, and it’s almost odd to see a home that has any equity in the property whatsover” says Susan Park, Realtor and Partner at Exit Real Estate Group in Los Angeles.

When lenders agree to do a short sale of your residence it means the lender is accepting less than the total amount due.( Example you owe 400,000, but your lender says OK we can sell it at 325,000.) Not all lenders will accept short sales or discounted payoffs, especially if it would make more financial sense to foreclose; moreover, not all sellers nor all properties

Keep in mind that I’m a Licensed Realtor, and not licensed as a lawyer nor a CPA and cannot advise on those consequences.
Check out The Mortgage Forgiveness Debt Relief Act and Debt Cancellation. I want you to be aware the I.R.S. could consider debt forgiveness as income and attempt to tax you through a 1099C. There is no guarantee that a lender who accepts a short sale will not legally pursue a borrower for the difference between the amount owed and the amount paid. If this is your primary residence and you can prove Insolvency you may not be reponsible to pay taxes by completing an IRS Form 982. I would advise you to talk to a CPA about IRS Form 982.

Although all lenders have different requirements and may demand that a borrower submit a wide array of documentation, the following steps will give you a great indicator of what to expect.

•  Call the Lender
  You may need to make a half dozen phone calls before you find the person responsible for handling short sales. You DO not want to talk to the “real estate short sale” or “work out” department, you want the supervisor’s name, the name of the individual capable of making a decision.  This process is very time consuming, and we don’t advise you to do this on your own, so that is why we would handle ALL the negoitations for you.

• Submit Letter of Authorization
  Lenders typically do not want to disclose any of your personal information without written authorization to do so. If you are working with a real estate agent, closing agent, title company or lawyer, you will receive better cooperation if you write a letter to the lender giving the lender permission to talk with those specific interested parties about your loan. The letter should include the following:

  • Property Address

  • Loan Reference Number

  • Your Name

  • The Date

  • Your Agent’s Name & Contact Information

• Preliminary Net Sheet
  This is an estimated closing statement that shows the sales price you expect to receive and all the costs of sale, unpaid loan balances, outstanding payments due and late fees, including real estate commissions, if any. Your closing agent will prepare this for you.

• If the bottom line shows cash to the seller, you will probably not need a short sale. 

• Hardship Letter
  The sadder your situation is, the better. This statement of facts describes how you got into this financial bind and makes a plea to the lender to accept less than full payment.  Believe it or not bank lenders are people also and can understand if you lost your job, were hospitalized, but lenders are not particularly sympathetic to situations involving dishonesty, criminal behavior or the use your equity as an ATM machine 

• Proof of Income and Assets
  Always Always be truthful and honest about your financial situation and disclose assets. Lenders will want to know if you have savings accounts, money market accounts, stocks or bonds, negotiable instruments, cash or other real estate or anything of tangible value. Lenders are not in the charity business and often require assurance that the debtor cannot pay back any of the debt that it is forgiving. 

• Copies of Bank Statements
  If your bank statements reflect unaccountable deposits, large cash withdrawals or an unusual number of checks, it might be a very good idea to explain each of those line items to the lender. In addition, the lender might want you to account for each and every deposit so it can determine whether deposits will continue. 

• Comparative Market Analysis/ BPO (Brokers Price Opinion)
  Across the nation markets are still declining and property values  continue to fall. If this is part of the reason that you cannot sell your home for enough to pay off the lender, this fact should be substantiated for the lender through a BPO. Your real estate agent can prepare a CMA for you, which will show prices of similar homes:

  • Active on the market

  • Pending sales

  • Solds from the past six months.

• Purchase Agreement & Listing Agreement
  When you reach an agreement to sell with a prospective purchaser, the lender will want a copy of the offer, along with a copy of your listing agreement. Be prepared for the lender to renegotiate commissions and to refuse to pay for certain items such as home protection plans or termite inspections.

Now, if everything goes well, the lender will approve your short sale. As part of the negotiation, our negotiatiors will ask that the lender not report adverse credit to the credit reporting agencies, but realize that the lender is under no obligation to accommodate this request.