BiggerPockets

WOW, 60 views and nobody has a comment or any feedback on such an important issue?
Where are you CA short sale investors?
Wake-up!

good info. I was just running into issues here with some REO's since the banks are hoarding them on the books some of the areas are getting some fake appreciation or atleast look like they are stabalizing which isnt true in sacramento.

In one are for example it went from REO's 3 to 1 to Shortsales 3 to 1. So im just about to start working on shortsales. If i can pass the test i should have my license soon too but will have to figure out how it works as for me reselling and whats a conflict and whats not.

I have talked to a guy in so cal a few times who does shortsales and said he can help but he doesnt have much time. He said i can join his team but i wont get much money probably just be more of a bird dog. He sent me his addendum and he flat out says its contingent upon him finding a qualified end buyer and banks are eating it up! Him and his team have 72 shortsales in the pipeline and he wil ONLY work with agents. I guess its better when an agent has an un approved shortsale because he gets a new contact, and when he closes with an end buyer (mostly retail end buyers) the agents shoot the next deal to him again to make a fast profit. Not sure how hes doing his end buyer stuff or if he uses and agent? I believe he is back to back closing them though. here is his addendum, appearantly it works but what do you guys think? Seems to me like a bank might turn it down?

1.This contract is contingent upon short sale approvals, acceptable to Buyer.
2.Seller must sign all buyer contracts and disclosures
3.The Seller understands that he will receive NO FUNDS AT CLOSING.
4.Parties acknowledge that the purchase price has been initially based on an estimated
negotiated debt at closing. During creditor negotiations, there may be several different
purchase prices submitted by Buyer to the Lender(s)/Creditor(s) until a final offer is
accepted. Parties acknowledge their acceptance of the different offers and Seller agrees to
authorize Buyer to prepare various negotiating offers with various prices without obtaining
Seller's signature or approval of each and every negotiating offer.
5.SELLER hereby grants the Buyer and or their representatives all of the necessary rights
to immediately list for sale, market, negotiate and enter into a contract to lease or sell
the property immediately to a third party for a profit. All documentation in connection
with the foregoing will be made available at the Lender's request.
6.Parties acknowledge that Seller may be asked by Buyer to sign a new or transparent
contract for the resale of the property. Seller agrees to sign such contract should such
signature be needed and requested by Buyer so long as such signature will not result in any
financial gain for Seller and that such signature is for the purpose of permitting any MLS
Listing.
7.This contract is contingent upon Buyer or Buyer's Realtor finding a suitable 3rd party
for the Buyer to resell the property to upon closing.
8.Seller needs to select services.
9.This addendum supersedes any conflicting agreements in the initial contract.

It really boils down to taking up-front fee's. I'm a strong believer of producing results before anyone gets paid anything. I personally have a couple short sales in my pipeline and I don't see how it would affect me. 1st off I use an option agreement and second I actually pay the seller an option fee, so I'm not in anyway taking any up-front fees whatsoever. Another piece of advice, use complete transperancy between all parties involved... Your thoughts?

FYI: My attorney also has strongly advised to use the PSA and not an option contract for short sales here in CA.
What does your attorney say?

One thing im actually considering on doing is just buy & rehab, hold then retail. I feel that the main issue in all this is the quick flip scenerio. So that might be another solution.

Couldn't agree more James! While CA politicians have their heads up their _ _ _, we have to find ways around all their BS. Be that as it may, don't fool yourself! CA is a great place to make a ton of money right now if you know what you are doing and do it right.

Will, may I ask what your attorneys experience is with foreclosures and short sales? how many short sale transactions has your attorney done? Apperantly theirs an attorney/RE investor, here in southern CA whos apperantly done he's own transactions, and a resource told me that this attorney is actually going in front of the DRE to explain the proceedure used to do these types of transactions. I understand an attorneys role but sometimes they are not experienced in a specific matter. I know becuase I've called many of them on this topic and they are honest and tell me they are not the attorney for me even though they specialize in Real Estate. I also believe this whole thing has to do with your approach. My approach to people is "I'd like to buy your house" no representation, or advice, or anything of th sort. Just a simple I would like to buy your house, in which their response is GREAT but im facing a foreclosure. I say OK, I'd still like to buy your house, and explain how I'm going to do it without really going into details. I also feel out the seller I'm dealing with, and to tell you the truth the deals I have in the pipeline are typically non-owner occupied homes where the seller has pretty much walked away and is not at all intersted in any type of help other then getting rid of the house. Every scenerio is different, so you will get different results...

I must agree with you Will on employing an agent do to shifting any and all liability issues. It would just mean you would have to train them and pay the buyer commission which inturn the deal will pay for regardless. My issue with agents have been that they lack the knowledge but other then that It definitely seems like the best way to go at this point. One last question for this forum, who are you afraid of the most in question to bringing a lawsuit against you? the Buyer? the lender apporving the sale? the lender financing the end-buyer? or all?

No ones getting screwed when everyone involved knows whats going on + they sign off on all paper work and its in writing...Thats why you disclose all this up front, even profit margins...(rule of thumb keep the profits around or under 10%) If someone doesnt approve of something then the deal doesnt go through. first off rule # 1 the seller cant make any money whatsover from a short sale so how are they getting screwed by you making a profit? #2 the lender who approves the short sale is apporoving a pay off its their final dicission, they dont have to agree to the short sale they have a choice, so how are they getting screwed? and 3rd the end buyers lender if they use a conventional loan, NO FHA here, is well aware that your flipping the property over but your first closing the first transaction with your money and you will hold title before you sell to the end-buyer. Now if the buyers lender doesn't want to lend the money then theirs no deal, but in all reality no ones getting screwed. I would understand if your hiding your profits but its all out in the clear for everyone to know and see. I know the attorney general and FBI are currently searching for Mortgage fraud, and rightfully so, but their is a legitamite way to do these flips, you just need the right knowledge, the right team, and the right intentions... Its called Transperancy.

Will, I just got off the phone with Michael. That's crazy stuff!!!

How come this issue didn't come to light sooner?

I sure hope you crazies in Californication land don't influence other states LOL!!!