Real Estate Financing Blog » Foreclosure

Shocking Short Sale Reports – Investors Turn

Teddy — Tue, 16 Mar 2010 16:54:22 +0000

Investors are turning away from short sales in droves as new reports of scary legal tactics come to light.

Many investors who have dealt in short sales over the past three to four years have unknowingly exposed themselves to prosecution as former home owners wake up to their old lenders garnishing their wages.

Of course they blame the investor who did not disclose that risk to them.

In the meantime, others are finding their investments save and cash flowing well.

Doug Fath, for example, a 28-year old real estate multi-millionaire, has made his imprint in a completely different niche, that is considered by most as one of the “scariest markets” in real estate.

After revealing what that niche is and how he has profitted from his investments, literally hundreds of comments poured in to his web site, asking for the “secret code” to be revealed.

Doug’s “secret niche” has the potential for immediate revenue streams, as well as long term wealth building features, as market analysis reveals strong demand and stable values in this market for years to come.

In fact, it is Doug’s long term market analysis which is based on demographics and specific needs of large groups of the population that has led Doug Fath to this profitable real estate niche in the first place.

Find out more and watch Doug’s free videos, and see the hundreds of comments that were left on his web site.

Click here to get the video

HUD Waives 90-Day Seasoning

Teddy — Sat, 16 Jan 2010 06:48:42 +0000

It has been kind of expected among real estate and mortgage professionals. Today came the official announcement from the HUD office.

As of 2/1/10, FHA buyers can buy properties that have been owned by the seller for less than 90 days.

Of course, there are some strings and conditions attached. Watch this video for details…

Resources:

Release text

PDF of detailed conditions

What do you think about the impact of this temporary waiver? Engage and leave your comment below!

California Bulk REO List – FREE

Teddy — Tue, 17 Nov 2009 22:17:59 +0000

Grab this small list of REO’s. I got it when I was looking for good deals.

These are, but they don’t fit our criteria.

Download the list here (contact and access information is inside the list)

Leave your comments below…

Mansions Ripe for Short Sales?

Teddy — Wed, 11 Nov 2009 21:34:49 +0000

The noise is getting louder every week. While entry level homes seem to have leveled off after a steep price drop, it looks like higher and homes are the next wave in foreclosures.

The Orange County Register reports that foreclosures in the high-value County has passed a record 8,800 for the month of September 2009. And the media blogs are of course all over the “bad news“!

The question is if these foreclosures are good short sale candidates for investors, or if we should let the banks deal with their losses and go the route of bank owned listings?

There are two criteria that make for great short sale deals.

One: The lenders’ motivation. On larger properties, lenders have to deal with larger loan amounts. A short sale on a larger loan removes a larger non-performing asset from their books. Lenders know that and act like it.

I was recently tracking a foreclosure on a $1.4MM loan. Unfortunately I got on the case too late and wasn’t able to prevent the trustee sale. However, the trustee told me that they had permission to take a bid of $765,000 at the sale. (Of course, the opening bid was advertised as $1,375,000, so nobody showed up…)

Two: Buyers willing and able to buy. Well, that’s a different story altogether. There are buyers with a lot of cash on the side, looking to put it into great deals. In the current lending environment there is no 100% financing for jumbo loan amounts. But that’s OK.

There is money for cash down payments and some buyers who can qualify. Most likely these sales will happen through buyer’s agents anyway, so it’s just a matter of how you structure your deals and setup your team.

On question that you have to keep a close eye on is what will happen with buyer confidence once a significant drop in prices is evident in areas that are now still hyped up as “recession proof”. You definitely don’t want to get in a position where you spin a lot of wheels on your short sales and can’t find a buyer in the end because your accepted offer is not good enough after the time it takes to get accepted.

Summary: Short sales for high-end properties and mansions are comming and are a very viable and lucrative foreclosure niche business. Leave a comment here if you want to hear more about our “Syndicated Short Sales” program! (And if you have any other questions or comments as well…)

Top 5 Must-Dos in Real Estate Market Research

Teddy — Fri, 25 Sep 2009 21:16:18 +0000

Have you been wondering why it seems hard to sell properties in a slow or down market?

Maybe you have not updated your market research to include this Top 5 List of Market Research Must-Dos.

This Top 5 List applies to any market, and any type of real estate investing.

Download your copy of the “Shock And Awe Real Estate Report“:

** How to GET UNSTUCK and rapidly accelerate the
growth of your business…

** How to get clear and focus only on the most
results-oriented activities…

** How you can connect to a network of proven
50/50 investment partners who do deals with you
again… and again… and again…

** And FINALLY… how to avoid the 8 common
mistakes that cause 92% of investors to fail…

Top 5 Must-Dos in Real Estate Market Research

Top 1: Find out which market segment is selling more and faster than others.

This can apply to a certain neighborhood, a specific price range, a specific size and type of home, and a specific condition of the home. You can find out this information from your agent and/or title company.

Top 2: Find out what type of buyers are active in that market segment.

In many markets FHA buyers are covering a certain price range and type of properties. If that is the case, pay close attention to the condition of these properties, and the price ratio between FHA buyers and other properties on the market, particularly bank owned listings! If you want to focus on flipping deals to rehabbers, find out which properties were cash transactions or closed with non-traditional financing.

Top 3: Take a closer look at the sold comps of only the last 3 months.

If you see a declining tendency in this time frame, make room for further price drops in your offers. Older comparables are more likely to be out of date and should not be considered.

Top 4: Compare inventory levels and emphasize active listings in your overall analysis.

If inventory levels are rising, you can expect longer marketing times and possibly lower selling prices. You can predict inventory levels by considering your foreclosure filings. If you have a large increase of trustee sales in the specific area, inventories will likely go up by a similar ratio, after a certain lead time (about 2 months).

Top 5: Make sure you are aware of any outside influences that may be important.

At times, your area may be affected by certain government or other programs that have been announced, or are going to expire. These programs, like the “First Time Home Buyers Credit” taht is currently in effect can strongly influence buying behaviour – sometimes only in specific market segments.

Having a list like this is very important and can also be used to estimate “BPO’s” for short sales etc. Always do your homework, and you will be able to leverage this competitive market insight to your or your clients’ advantage.

Please let me know if you have anything to add to this list, or if you have any question or opinion about this list! – Just leave me a comment!

Lake Los Angeles Homes for Sale

Teddy — Thu, 24 Sep 2009 01:15:59 +0000

I had my own “shock and awe” today, when I looked at
homes for sale in Lake Los Angeles, and found a home that was
right next door to the very first foreclosure deal that I ever bought.

The house that I bought was a 3 bedroom 2 bath ranch on half an acre
on 174th St in Lake Los Angeles.

Back then when I got started I did quite a few deals in that area and
every one of them has a unique story of trials, challenges, and
eventual success.

Going back to my beginnings, I notice one huge difference:

Urgency!

Even though this happened in a “hot” sellers market that is by
no means comparable to what’s going on today, all the deals that
I did at first were taking some time.

This first foreclosure ever for me – the seller called me 7 days before the
trustee sale and asked me if I could still do anything…

I was a total “rookie” then, but hey, there weren’t too many callers
that were pretty much out of options then.

And in spite of my “total rookie” status I made it happen! I made
arrangements with the foreclosing lender to come to the “cryer”
at the trustee sale, and hand him a cashier’s check for about $9,000
to bring the loan current.

I thought “Wow, if I can pull that off that I snap this property
away from under the noses of 65 eager trustee sale bidders,
that’d be something!”

And sure enough – that’s what I did.

So, yes, there was that urgency to GET the deal, but there was
no urgency at all in selling. Sure, I was totally nervous about
getting the house moved, and it was a 2-hour drive one way
for me to get to it…

But it wasn’t like I (or anybody else) EXPECTED to get any
deal sold within a few days! – Even though it was a “hot sellers market”!

Why then is it that everybody expects this now – in a slow buyers market?

Yes, it’s true – many deals have to be validated by having eager “wholesale
buyers” swamp your web site the second you send out an email, but I think that
many “rookie” and seasoned investors alike are cheating themselves
for a lot of gains by being too impatient.

Lake Los Angeles homes for sale are now MLS listed for half the price that
I paid for my first foreclosure. Do you really think it is hard to make
these deals profitable?

Here’s a solution: Do your homework!

Watch for tomorrow’s post on this blog:
“Top 5 Must-Dos in Real Estate Market Research”

Download your copy of the “Shock And Awe Real Estate Report“:

** How to GET UNSTUCK and rapidly accelerate the
growth of your business…

** How to get clear and focus only on the most
results-oriented activities…

** How you can connect to a network of proven
50/50 investment partners who do deals with you
again… and again… and again…

** And FINALLY… how to avoid the 8 common
mistakes that cause 92% of investors to fail…

7 Top Short Sale Negotiation Tips

Teddy — Wed, 16 Sep 2009 16:14:41 +0000

Over the course of the past 24 months, we have negotiated a lot of short sales, both in-house and through short sale negotiation services. Here is our list of the Top 7 Short Sale Negotiation Tips that we’ve gathered:

1. Conflicting views on BPO (Broker Price Opinion) – Insist on getting an interior BPO. Do your homework and gather all factual evidence that supports a low BPO. Meet and accompany the BPO agent to the property and provide him or her your evidence.

2. Incomplete Package/Request Additional Documents – Often, the lender will delay assigning a negotiator to a file if they find something missing from the required list of documents for the short sale package. A variation to this is that the lender requests additional documentation, which can sometimes be just a minor item like some disclosure that has to be signed by the seller or buyer. Another variation is the phenomenon of the “lost file”. Be persistent and get them what they need. Make sure the package is complete in the first place. If it gets too silly move on.

3. Issues with or on the HUD-1. The HUD-1 is the main negotiation document as far as the numbers are concerned. If the lender finds something odd on it, they will not process the file. Make sure you have ALL fees and charges that are paid by the seller included on the HUD-1, and entered in the correct spaces. The amount due seller has to be $0.00. If the buyer is an investor or cash buyer, don’t expect to get any buyer’s closing costs approved. (Note: On a cash transaction the seller and seller’s lender have no right to see the buyer’s side of the transaction.) Double check the HUD-1 when you get it from your escrow or title company and before you submit it to the lender!!!

4. Back Taxes (property taxes). Property taxes will stay with the property even in a foreclosure. That’s why paying past due and prorated property taxes from the proceeds of the sale is never a disputed issue. However, it’s very important that you let your title company determine any taxes beforehand, and enter them on the HUD-1 that you submit with the short sale package. Once a payoff amount has been approved it can be difficult to take anything away from that.

5. Agents Commissions. Agents commissions are customarily paid by the seller. However, recently, lenders have been trying to cut down the amount of commission. In certain types of transactions (especially if the buyer is an investor or an entity), they have even tried to refuse to pay any commission at all. See my separate blog post, “Short Sale Commission Squeeze” for an appropriate answer to this.

6. Sellers Contribution. Recently some lenders have been demanding that the seller put actual cash into the transaction to close the deal. Considering that the short sale is a business decision that is driven by what’s best for the lender (taking the short sale or foreclosing), this demand doesn’t seem to make any sense at all. There are some indications that this issue may be triggered by lack of evidence that there is an actual hardship. If the credit report shows that the seller is current on everything but this loan, this could be an indicator. Provide additional evidence of the seller’s hardship. And make sure to not take the money from anywhere else but the seller if this demand comes up.

7. Trying to control resale. Lenders have recently tried to enter clauses into the short sale approvals that essentially control the title of the property beyond the closing of the short sale transaction. These clauses are attempting to prohibit the buyer from reselling the property within a certain time frame. If this comes up, do not just sign off on it! Most title companies will be on your side in arguing that the seller’s lender has no right to essentially cloud the title by these kinds of restrictions.

For most obstacles that you get thrown in your way of a successful short sale, you have two alternatives to keep it going: Abide or negotiate. Of course, it depends in many cases on the deal whether you CAN abide, but in most cases I would suggest to negotiate first, unless it’s easy to abide.

If you have other negotiation points that come up in your short sales, and if you’ve found great answers and negotiation strategies for them, I’d like to hear from you!

Please leave your comments and suggestions, and share your short sale negotiation tips below.

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Short Sale Commission Squeeze

Teddy — Thu, 10 Sep 2009 21:15:13 +0000

This just in from the Short Sale Trenches…

In several of our recent Short Sale Negotiations the lenders have been trying to squeeze the commissions paid to real estate agents on the short sale out of the transaction and HUD-1.

In particular, when we were buying under an LLC or other entity that was obviously an investor buyer, the lender tried to refuse to pay any commission based on the argument that “the agent did not do any marketing for the property”.

Nice try!

Here’s how we countered and got the commission approved: We pointed out to the short sale lender that real estate commissions are not “marketing fees”, but they are paid for representing the buyer and/or seller as a licensed real estate agent.

Since there are serious liability issues attached to agents representation, we asked the lender to check with the board of realtors and the state association of realtors about the liability they are getting themselves into when they force the seller and/or buyer in a short sale transaction to be without agents representation.

As I mentioned before, we got the agents commission promptly reinserted into the HUD-1 and approved for the short sale.

Are you running into similar issues with ridiculous demands by short sale lenders?

I’d like to know about that! Please feel free to comment on this story and share your own experiences below.

Talk soon!

Thomas Bartke

Real Estate Financing Blog » Foreclosure

Shocking Short Sale Reports – Investors Turn

You may also like these posts:

HUD Waives 90-Day Seasoning

You may also like these posts:

California Bulk REO List – FREE

You may also like these posts:

Mansions Ripe for Short Sales?

You may also like these posts:

Top 5 Must-Dos in Real Estate Market Research

Top 5 Must-Dos in Real Estate Market Research

You may also like these posts:

Lake Los Angeles Homes for Sale

You may also like these posts:

7 Top Short Sale Negotiation Tips

You may also like these posts:

Short Sale Commission Squeeze

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