The Short Sale Approval Team

2010-03-21T10:17:00.000-07:00

The Short Sale Process

2010-03-09T15:22:00.000-08:00

The Steps to complete a short sale transaction
Well, I have decided to Blog about the steps to take to complete a short sale transaction. A few major points must be pointed out. I feel that this is the most important thing- many of these steps will need to be performed along side of others. If you are not able to multitask, get help. I recommend that for the first transaction, you either have someone assisting you or have someone that will be available to give you guidance. Another major point to understand right off the bat, this process is not easy. I think that too many people out in the real estate investment world make short sales sound simple. They are not simple, but the challenge will be one of the most gratifying parts of the transaction. One must notice that I have not stated that short sales are impossible. Because they are not impossible! As you do more short sales you will find yourself developing a “system.” This is a very important part of the process. By forming a “system” to conduct business, two(2) things will happen. First, you will streamline your time and catch errors and mistakes faster. Secondly, you will be better equip to handle more properties at a time. Both of these items equal to; more business, more money!
Step 1- Marketing to Sellers
There are many, many ways to find property owners in the foreclosure process that are willing to sell their property. The situation we utilize, is to mail directly to the property owner. We get the information for all properties in our area that a Lis Pendens has been filed. (In Florida, filing a Lis Pendens is the first step to foreclosure.) By obtaining this information, we sort out the properties we want. We then send out a direct mail piece to each property we are interested in purchasing. Once a property owner calls our office, we have a few questions to further weed out the properties that do not fit our criteria.
Another way to acquire sellers is to get the information from a Realtor. Due to Realtors having access to properties that are listed, or even listing properties themselves, they have the ability to forward you the property information. If this is the route that has been decided to take, make sure you fully explain your intentions to the Realtor. This will remove any misunderstanding on either party. * We do NOT use this manner!
Step 2- Negotiating the Deal
Once a property that meets our purchase criteria if found and the property owner is interested in selling the property, we set up an appointment to view the property, talk to the property owner about the short sale process, inform the property owner that they will NOT PROFIT ANY FUNDS from this transaction, and make sure the property owner is willing to gather the needed paperwork to fulfill the short sale requirements. We further explain that we are a real estate investment company and will be purchasing this property for investment purposes only. Another point of interest for the property owner is that our intentions are to purchase the property for the lowest price we can, and then sell the property for a profit. While discussing this process, we make it very clear that we will be working directly with their Lender(s). (We make it very clear that we will attempt to perform a short sale. No guarantee can be provided!)
Step 3- Signing of Contract and Gathering Required Paperwork
Once both parties agree to perform the needed actions for this transaction to close, we set up a time to sign the contract and gather the needed paperwork. We get the property owner to give us a timeframe it will take for them to gather the needed paperwork. Once all paperwork is gathered, we will meet to sign the contract. At this meeting we review all paperwork to verify everything is included, sign the contract, sign all addenda, and once again fully review the short sale process. We cover the short sale process several times to make sure the property owners understand the process. An update is offered to the property owner anytime during the process. Copies of all documents are supplied when requested.
Step 4- Negotiating with the Lender(s)
In my humble opinion, this is when the fun begins. When all paperwork is collected and signed, you then start the short sale process. Once authorization for the Lender to speak with us is acknowledged, we request their short sale requirements. Upon acquiring the requirements, we fax the package to the lender. An important note- the initial offer is where the negotiating begins. Each lender will take the opportunity to order a BPO (Broker Price Opinion). We request for the BPO to be scheduled through our office. After the Lender receives the BPO, they will make a counter offer. At this point, we negotiate back and forth until we both (Lender and us) come to an agreed purchase price. Once this price is agreed upon, we request for 30 days to close.
Step 5- Close the Property
This is the step in the process where you actually purchase the property. To be able to conduct this step, a few items must have been previously set up. First item, getting a title company to perform the closing. It is highly recommended to take the time to discuss with any potential title company the entire plan (i.e: Buying property through short sale and then resell property for profit.). Second item, financing. Funds must be lined up in advance of the closing. And third item, making sure the property owner signs the closing documents. This might sound a little confusing, but remember that a property can not be purchased unless both the Seller and Buyer sign the closing documents.
Step 6- Sell the Property
Selling the property is without no doubt my favorite part of the entire process. Why you ask? This is where the profits are obtained. Although this step might sound simple in name, this is where most investors fail. The ability the find a potential Buyer is a stumbling block. But, is used correctly, a few simple items will assist in locating Buyers. First item, the property must be marketed to located Buyers. This step must be performed while the above steps are being completed. Second item, negotiate selling price. Just as the purchase price must be agreed upon, so does the sell price. Third item, setting up the closing to sell property. Once again a title company must be utilized to perform this action. Once the closing is set, show up and sell the property. (If all things have gone correctly, walk away from this closing with PROFITS!)

These are the “basic” steps to a short sale transaction. In the near future, we will break down each step separately. As each step is broken down, we will address a multitude of things that must be completed for each item. Once again, many of these steps will need to be performed in coordination with each other.

Foreclosure Help

2010-03-09T14:41:00.001-08:00

The Foreclosure Process

2010-03-06T18:21:00.000-08:00

Note: The following is a generalized breakdown of the foreclosure process . If you're interested in finding out about foreclosure laws in your state, please see our directory of Foreclosure Laws for All 50 States.
Foreclosure Defined
A foreclosure occurs when a property owner cannot make principal and/or interest payments on his/her loan, typically leading to the property being seized and sold.
Stages of Foreclosure
The foreclosure process is not very difficult to understand. There are several stages during which the homeowner has an opportunity to bring the loan current and avoid foreclosure.
After about three to six months of missed payments, the lender orders a trustee to record a Notice of Default (NOD). At the County Recorder's Office. This puts the borrower on notice that he or she is facing foreclosure and starts a reinstatement period that typically runs until five days before the home is auctioned off.
If the default isn't corrected (the loan must be brought current) within three months, a foreclosure sale date is established. The homeowner will receive a Notice of Sale, and this notice will also be posted on the property. In addition, the Notice of Sale is recorded at the County Recorder's Office in the county where the property is located. Finally, this Notice of Sale is also published in newspapers local to the county in question over a three-week period.
The foreclosure Trustee Sale typically occurs on the steps of the county courthouse in which the property is located. The time and location of this sale are designated in the Notice of Sale. At the Trustee Sale, the property is auctioned in public to the highest bidder, who must pay the high bid price in cash, typically with a deposit up front and the remainder within 24 hours. The winner of the auction will then receive the trusteeÂ’s deed to the property.
Foreclosure Auction
At auction, an opening bid on the property is set by the foreclosing lender. This opening bid is usually equal to the outstanding loan balance, interest accrued, and any additional fees and attorney fees associated with the Trustee Sale. If there are no bids higher than the opening bid, the property will be purchased by the attorney conducting the sale, for the lender.
If this occurs, and the opening bid is not met, the property is deemed a REO or Real Estate Owned. This typically occurs because many of the properties up for sale at foreclosure auctions are worth less than the total amount owed to the bank or lender.
When you purchase property at a foreclosure sale, all junior liens other than property taxes are wiped out. Priority of liens is determined by the date of recording. When you purchase a REO aka. Bank REO, you will typically receive the property with a clean title.

What Is A Short Sale

2010-03-05T11:08:00.000-08:00

You may have heard the term but are not clear on what is a short sale in real estate investing. The newest way to purchase or sell property by negotiating a discount with a mortgage company isn’t very new at all.

To sum it up, a Realtor, investor or homeowner contacts the mortgage company of a homeowner who is behind on payments or facing a financial hardship in an attempt to negotiate a discount.

The lender either accepts or rejects an offer to purchase the property lower than current amount owed.

When home values fall and home owners need to sell, a short sale is a great way to create a true win win situation for everyone involved. Most homeowners who have little to no equity cannot afford to pay the difference between what they owe and what the home will sell for.

Negotiating a short payoff on the mortgage can prevent foreclosure for many people who have no alternative.

Being reasonable when requesting a discount is the best way to get a short sale approved. If you request 20-30% off of what is currently owed on the property, your chances of acceptance are pretty good.

If a property is in need of many repairs or has some serious defects you may have luck negotiating as low as 50% of what is owed.

Banks have been loosening their policies as of recently, making it easier to get an approval. Now is the time learn how to short a mortgage loan the correct way.

Since the sub prime mortgage meltdown and decline in real estate values, many people are over leveraged and need to sell. When there is little or no equity in a home and a homeowner must sell, a short payoff may be the answer.

Many investors and real estate agents are missing the boat of huge profits that is floating right by them. Savvy professionals are now asking, what is a short sale?

We Offer Short Sale Negotiation Help

Foreclosure Process

2010-03-04T16:36:00.000-08:00

There is no time to hesitate when the mortgage foreclosure process begins.
Time is absolutely of the essence when a forclosure notice is filed against you. Typically a mortgage company will file a lis pendens lawsuit against you after you are delinquent on your mortgage for 3-6 months.
I have seen the bank wait as long as a year or more before filing on a homeowner! That particular person just fell through the cracks of the processing nightmare.
Typically banks do not want to foreclose on a house and they will do anything to avoid it. A short sale is a great way for the homeowner and bank to both win.
Once an attorney hired by the bank files the formal paperwork at the county courthouse the clock has begun ticking. You must act fast if your goal is to avoid foreclosure.

Step 1 - Explore your options. Can you refinance? Do you have a way to settle up the back payments owed? Can you sell your house fast? Can you restructure your loan?

Step 2 - Contact the bank. If you have no way to settle up with the bank, call and ask what you can do. As I mentioned, they don’t want to foreclose and they will try and help you work it out.

Step 3 – Contact a home buyer. You will start to receive many letters in the mail from real estate investors and realtors. Start calling them and see what they have to say. I myself have helped many people avoid the mortgage foreclosure process and I enjoy it. Screen them and go with someone you can trust and who you feel the most comfortable with.

Step 4 – Attempt to sell your home. If none of the previous steps have worked, put your house on the market. If you can locate a trustworthy Agent to sell your house and if you have enough equity do it. If not, try to negotiate a short sale with the bank and sell it yourself.

Step 5 – Offer the bank a deed in lieu of foreclosure. If nothing else works, offer to give the bank your house. They will sometimes accept a deed in lieu of foreclosing on a house if it makes sense for them.

Step 6 – Declare bankruptcy or let them take the house. This is an absolute last resort. Do not do this until you have tried everything else.

After the bank files the notice with your county, there is some time before the sheriff sale or judgment sale. It could be as much as 1-3 months or even up to 6 depending on how aggressive the mortgage company is and your local laws.
If you house goes to the auction, chances are the bank’s representative will buy the property back and it will become bank owned property. Many auctions contain properties that have little to no equity, making it harder to find a good deal at an auction.
The mortgage foreclosure process can be avoided if quick and decisive action is taken, so don’t hesitate.

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