Diary of the short sale freak.

A few "special" items that will ensure your Short Sale success.

We have decided for our next Blog post we will make available some of the “special” items that we use to assist in our Short Sale success. While there are countless items that will make your Short Sales more successful, we have found this list to be the most outstanding. If any of our readers have any other items they have found to assist in successful Short sales, please let us know. We will gladly post them, and also give out the place where we acquired the great information.

List in no particular order:

Keep running information about each Lender- Each Lender will give you their requirements for a Short Sale. By keeping a list for each Lender, this will enable you to move quicker. This comes into use especially when a Lender requires you to utilize paperwork that the Lender has designed. Anything that can assist on speeding the process along is a plus in our book!
Keep the information on any negotiator that you have had success- We have found that keeping the contact info about a negotiator that we worked well with, has helped in a couple ways. We have contacted some of them to get a file “moving” along. We also have called to see what the negotiator might be able to do to help if we have a problem. In both cases, this does not always work, but it does work enough times to mention. Sometimes you can even get that negotiator to take over the file. When you have worked with them, negotiated a deal, and closed, they are willing to see what they can do for you. This helps everyone evolved.
Sending rehab cost estimates by a contractor- This will provide more creditability for the estimated costs. It does not necessarily need to come from just one place. If you need to get several sub-contractors to bid for each separate item, then sent them. The more professional the estimates, the better it is for you and your offers.
Include the “Sexual Predator” list- This is probably something new for most readers. When you send in your Short Sale package, send in a map that highlights all of the sexual predators in the area. WHY? This will further show why your offer is a good one. Plus it notes how it will be difficult to sale this property! Further justifying your offer. Not to mention pulling on the heartstrings of the negotiators.
Use professional style paperwork- Over time, we have found that the more professional you documents look, the more serious the Lenders will take your company. We have formulated our paperwork to the point in which all papers are professionally written. We include our company information on the documents and have everything “color coated”.
Include loan number on each page- Several of the Lenders will require this, but we just put it on all papers. You can include the clients name, but we have found that it is not necessary. (Unless the Lender requires the name.)
Detailed fax cover sheet- This is one of the most important on the list! Items that should be included: company name, company address, company phone and fax, company contact name, client name, client social security numbers, property address, loan number, brief description of deal, number of pages included, lender name, lender phone and fax, lender contact name, and fax disclosure. We use a set form for each property and just fill in the needed information.
Keeping in touch with the property owner- This one sounds pretty basic, but it would amaze most readers how often the property owner gets lost in the process. We offer to either eMail the client weekly or make bi-weekly calls. Keeping in touch with the client will also assist in them not being surprised a the time and efforts it takes to complete the transaction.
Make sure the BPO is scheduled through you- By scheduling the BPO through you, you simple will know when it happens. Also, it enables you to be prepared to “assist” the BPO agent with their work. You can “assist” the BPO agent by supplying the following: comps (find some for yourself), repairs list, sexual predators map, and your contact info. One last piece of advice about the BPO- stay out of the agents way.
Property clean-out- Getting the property empty and ready for close can be a daunting task. Plan on having to take out items left by the property owner. But you will defiantly want to make sure the property is clean of left behind items.

We truly hope this list will help anyone attempting to complete short sales.

James

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.

Thanks

Typically Required Paperwork- Short Sale

I will now discuss the typically required paperwork for a short sale. I will preface this with the following: After much time, study, and experience, this list is typical for short sales. Some lenders will require more, some less, and some will even require you to use their paperwork.

We supply each property owner with a check list of the required paperwork. The reason for this action is two (2) fold. 1) To let the property owner know this list has been produced with much thought, care, and professionalism. 2) To show that we will NOT start the short sale without every item on the list.

Following is the list, with explanations for each.

1) Hardship Letter- This letter is the chance for the property owner to express to the Lender(s) how this problem started, moved into the place it is today, and where the property owner sees themselves from here. Please do not use abusive language, is expressed to each client. Assistance can be provided if needed.

2) Financial Worksheet- This is a monthly financial statement. The document shows the Lender(s) how much money comes into the household and also all the bills. This will defiantly convey to the Lender(s) your inability to pay the mortgage.

3) Tax Returns- The last two (2) years are required. All pages are requested, to include the signature page. If you have not filed taxes, a letter to state this is required.

4) Pay Stubs- We will need the last two (2) pay stubs. This will verify the income on the financial worksheet. Any type of assistance programs will also need to be included. If you have no pay stubs or are currently unemployed, simply write a letter stating this factor.

5) Bank Statement- The last two (2) months are required. This will verify the statements on the financial worksheet and also shows that there are not large sums of money setting in an account. If you do not have a bank account, simply write a letter stating this fact.

6) Authorization to Release Information- This is the only way for us to contact the lender. Without this document, we can’t start the process. We will need a separate letter for each mortgage.

7) Contract- This is the purchase agreement.

We have each client sign the check list once they have gathered all of the required paperwork. We also give the client the assurance that all of these documents will be properly destroyed upon closure of the transaction. With written request all documents will be returned.

We offer assistance to any client that needs it to gather the documents. We also put a timeline on how long we will await. We typically allow 2 weeks. This is ample time.

A "sample" Short Sale Presentation

I have received many requests and have been on several phone calls with investors of various types requesting for me to display how we approach each short sale presentation. I first will make a huge disclaimer: This is how my company approaches each short sale. There are many, many, and many more different ways to approach each deal. Feel free to use this approach.

When we receive a call into the office from one of our potential deals, we first ask this question. Is this property listed with a realtor? Our reason for asking, is simple, in our business plan we have decided to not pursue properties that are listed with realtors. If the property is listed, we simple let them know that we do not pursue properties that are listed. If the property is not listed, well here we go.

Our next step is to define who we are. We state, “We are a local investment company that specializes in purchasing properties that are in the foreclosure process.” We also ask is they are interested in SELLING their property. If they are interested in selling their property, we set up an appointment to look at the property.

At the set appointment, we look over the property and talk to the property owner. We at this point discuss how we purchase properties. We state that in today’s market, most properties that we are running into, the owner owes more than the property is worth. Add this to the fact that they are behind on their mortgage payments. This leads us into the conversation about “short sales.”

We explain that a short sale is pretty simple. This is when a lender or lenders agree to accept less money than what is owed for a certain mortgage. Upon the agreement, the sale of the property will take place. We further explain that this process can take from 6 weeks to several months. The faster and more compliant we are, the quicker the process. Also explained is the fact that they, the owner, will not profit any funds in this transaction! We also state, that we will not in any way pay any funds, to the property owner, outside of this transaction.

Next, we explain that we will not attempt anything, until we have received the complete short sale package and also a signed purchase agreement. We at this time, leave a check list with the property owner. As soon as the owner has the complete list, we will set another appointment to meet, collect the paperwork, sign the purchase contract, and any addenda that are required.

Collect paperwork, Sign contract, Sign addenda, and move forward with short sale.

Marketing to Pre-foreclosure Properties

I want to discuss some items we have found that help to market to pre-foreclosures. One “trick” we have found, and have had multiple property owners talk about, is to hand write each letter. We also have found that hand writing the envelope assists in putting a point of personal care into the mail piece.

More times than I can count, the conversation starts with the property owner saying something like, “I felt really comfortable with the hand written note we received from you.” Another expression we frequently get is that the property owner fells like we care about them, due to us taking the time to hand write the note. We always love to hear these stories, and as of late, we are hearing these types of comments more and more. I am noticing that most people just want to know that someone cares. In our society today, we are missing that personal touch. Hand writing each letter is a simple way to put this back into your workplace.

We are also seeing great results with the hand written envelope. This is the first item the property owner sees. And we have many telling us, I thought someone had taken the time to write me a note. We always reply we did! We took time out of our business to send this letter, because we are aware of your situation and we might have a solution that works for all parties. WHAT A GREAT LEAD INTO A YOUR PRESENTATION!

One other thing we have found that also gets the letters open is to address the envelope to the “man of the house.” We are getting many ladies stating that they opened the letter because they wanted to know who was sending their husband a hand written letter. WOW! What another great way to get that letter opened and not a straight beeline for the garbage can.

I hope these items will help in getting more replies for your marketing to pre-foreclosure properties.

Thanks and “Good-day”

James

1st Blog

Well, this is my first blog. I am going to let others into my little world of real estate investment. I have educated myself over the last several years, and am extremely proficient at short sales. With an approved short sale, we purchase the shorted property and then wholesale that property. Please as you read, leave me comments. This will assist me two (2) fold. One, will let me know others out there are actually reading my posts. Two, will help to guide my posts on topics of interest.

With that, I say “good-day.”

James