For those of you who are new to the Short Sale arena or new to real estate investment, let’s first define what a „short sale“ is and what it’s SUPPOSED to accomplish. A short sale is the process of negotiating with a Mortgage Lender to convince them to accept less than the Homeowner’s mortgage balance as payment in full for the property in order to prevent foreclosure, eliminate the nonperforming loan from the Lender’s balance sheet, and allow savvy real estate investors to profit from purchasing property below market value. A Short Sale is generally a great strategy to use when a Homeowner is behind on their payments and owes close to or more than what the property is actually worth. The state of being „Upside Down“ (Debt > Equity) is the ideal situation when targeting short sale candidates and getting these deals done successfully on a consistent basis.
Negotiating a short sale is SUPPOSED to help the Lender and the Homeowner in default by preventing the foreclosure, wiping the slate clean for the Homeowner, and providing that Homeowner with an opportunity for a fresh start–and providing the investor with a substantial discount vs. Fair Market Value (FMV) to earn a reasonable profit on the immediate sale or on a fix & flip sale down the road. However, it doesn’t always work out that way. Experience has taught me that these 3 Key Factors are HUGE components of the harsh reality you can expect throughout the short sale negotiation & completion process.
KEY SHORT SALE FACTOR #1:
In spite of the reality that we’re in the midst of a tremendous foreclosure tsunami, some Lenders are still irrational and downright idiotic in their decision-making process. Case & Point: GMAC will only accept short sales that come in @ 90~100% of fair market value (FMV). So, they’ve effectively taken the „short“ out of „short sale“! Now ain’t that just dandy? OK, time to whip out your calculators and see how much profit we real estate investors can bang out buying short sales @ 95% of FMV. Hello! Time for a reality check!
KEY SHORT SALE FACTOR #2:
Regardless of the fact that we always include a line item on our Purchase & Sales Agreement (PSA) stating: „This offer is contingent upon Buyer arranging for [Lender] to accept $________ as full payment WITHOUT pursuit of a deficiency judgment against Seller for the mortgage that Mortgagee holds on the Property“, some Lenders completely IGNORE that contractual line item. For example, HSBC is notorious for NOT waiving deficiency judgments.
Buried among the standard jargon on HSBC’s short sale acceptance letter is „HSBC Mortgage Services will retain the note on this loan. The customer shall be responsible for any deficiency remaining on the balance. All terms of the original note shall remain in force.“ Wait a minute! So, HSBC agrees to do the short sale so long as they don’t end up short? They’ll discount their lien as long as they get the whole thing!? Wow! What a deal! The bottom line is that after you’ve painstakingly negotiated to get HSBC to agree to accept a short sale you realize that you’ve been hoodwinked because the deal is contingent upon the fact that it’s NOT really a short sale at all. Welcome to Crazy World!
The slick tactic here is that HSBC is making a brazen attempt to get your clients to bind themselves contractually to pay the deficiency as part of this „short sale“ (ya know, the kind where they’d still owe ‚em everything). C’mon guys! We’ve gotta stand firm and do like Nancy Reagan on this one–JUST SAY „NO“! In spite of the existence of less-than cooperative Lenders with unhealthy attitudes, this HAS to become the Golden Age of Short Sales because Lenders simply can NOT keep being idiots and stockpiling REOs in perpetuity. Something’s gotta give!
KEY FACTOR #3:
There’s one document that none of my colleagues ever seem to include in their short sale packages perhaps because I’ve never seen it on the documentation list of HOW TO DO SHORT SALE programs. Since that document didn’t exist, I just had to invent what I call the Offer Price Determination (OPD), which basically walks the Lender through the process of exactly how we’ve determined our offer price. A sample of our unique, Radiant Properties OPD is available to you for FREE on our website, with which I’ll provide you below.
For those of us who’ve endured the short sale process, we’re aware that influencing the BPO (Broker’s Price Opinion) is perhaps THE most critical aspect of getting our short sale offer accepted and closing the deal. When I personally meet the BPO Broker at the subject property, I hand her or him the BPO Packet that I’ve carefully prepared just for them. That BPO Packet generally includes:
- Comps @ or near our offer price
- Detailed Rehab/Repair Estimate
- Homeowner/Seller’s Hardship Letter
For many of you, the mounds of required documentation is the scariest aspect of short sales. To alleviate that fear, Real Estate Profit Pro (REPP), an indispensable tool created & developed by my mentor, friend, and confidant–mega successful real Estate Investor, GERALD ROMINE is THE system that all PROFESSIONAL real estate investors should use to quickly & efficiently prepare short sale paperwork AUTOMATICALLY. So when the foreclosure glut causes the mortgage industry to implode (more acutely than it already has) as a result of the Lenders‘ own greed & lack of foresight, since YOU will have access to this information and powerful tools like Real Estate Profit Pro, you’ll be fully prepared to swoop in, clean up the bloody mess, then reap your profits using REPP–your powerful secret weapon to complete massive short sale packages in just minutes!
When you’ve made the wise decision to have REPP & real estate investment superstar Gerald Romine on your side, you too will be armed & ready to locate & complete the REAL Deals with the Lenders that will eventually be FORCED to become flexible enough to work with you to help them put an end to the foreclosure glut and CREATE WINNING SITUATIONS for Homeowners, Lenders, YOU, and your real estate investment business!
Since many Lenders are still in SERIOUS denial about this foreclosure mess that THEY created, realistically, some short sales will work–others won’t. So, the idea is to be sure to have a system in place to analyze deals and make offers quickly. Since I’ve been fortunate enough to have direct access to Gerald Romine and Real Estate Profit Pro since my very first real estate investment deal, I must admit that I’ve been operating at a tremendously unfair advantage vs. my competition. The GREAT NEWS is that when you visit the Radiant Properties website, you too can access this powerful REPP unfair advantage!
When you arrive at the Radiant Properties website, just look on the left menu, then click on the link to check it out. While you’re there, you can also click on the menu link to get your FREE sample of our unique, proprietary Offer Price Determination document that will MAKE YOU MONEY by giving you an unfair advantage over your competitors within the short sale investment arena. When you apply this new knowledge and Real Estate Profit Pro to your real estate investment business, you’ll certainly notice the difference in your bottom line soon enough. Since we intend to include the OPD worksheet in an upcoming short sale system that will soon be FOR SALE, the OPD Sample will only be available for FREE on our site for a VERY limited timeframe. So you’d be wise to hurry!
Finally, now that you’re fully aware of these 3 Key Factors Gurus NEVER Tell You About HOW TO DO SHORT SALES, just visit our Radiant Properties website listed below, get the REPP and FREE OPD info you need, then go negotiate & CLOSE a PROFITABLE short sale deal! Short sales aren’t easy, but you can successfully close these deals on a consistent basis–when you have the right tools…
by Charles Emery