BiggerPockets

Hi All,

I am experienced in short sales and I am willing to share some of my knowledge with those who are interested in this area.


Bye for now!

Yes, it is amazing. Unfortunately it means a lot of good people are losing their homes. At least I can help some of them avoid foreclosure and make a good living along the way!

Nice meeting you!

Chris,
Welcome to BP. I am curious how you are making the most of your short sales right now and what you are doing that works. I have not looked at the business much from this point of view. With all of the bankd owned properties all over, what makes a short sale better than buying after the fact?

what systems do you have in place which makes your business successful?

Hi Will,

There is many moving parts to short sales, as such, there is many "systems" we use. I will lay out our process and hope that answers your question.

Almost all of the deals we are doing are word of mouth referrals. I am actually putting together my marketing plan now that I am ready to take on a much larger volume.
At first I did EVERYTHING and worked myself to death. I am glad I did now because it made me better and I honed my skills, which makes my current structure, much less stressful.

Now, the agents we work with go out to meet the homeowners on many occasions, get my contracts signed, and gather the financial docs from the seller. They deliver the package to my office and my assistant checks everything in, and requests anything missing from the homeowner.

She then sends the package to my negotiators office. Tip: Try to find a great negotiator early on, it makes a huge difference and you can avoid the brain damage of working with the lender yourself, which also frees up more time for finding deals, playing golf, and having fun with your kids (if you have'm of course.)

My negotiator takes it from there. When the BPO is ordered, Either my agent, me, or my biz partner go out to meet the BPO agent.

Once we get a counter from the bank (happens almost everytime) we determine based on comps and the number they would like us to be closer to, what we do next.

If we think we can get a good number, we counter back and at this point list the property in the MLS to find our end buyer. If the number is too high, we evidence to the bank why we disagree, and push for another BPO.

If the price remains too high, we wait until we get a buyer that makes an offer around where the bank wants and we "substitute" their contract for ours to get the house closed and help the owner avoid foreclosure.

If the price is good and we know we will make a profit once we find our buyer, we crack a beer and celebrate.

I was a lender for years and the last piece of our business is making sure that our buyer's lender has no seasoning issues (if they are not paying cash of course) and will go all the way to just prior to loan docs for us to take title.

We then close on the property, our title company gets an updated title prelim the same day over to our buyers lender and usually in a day or two they sign to close and we get paid.

Let me know if you have a more specific question that I can answer.

I am curious how you are making the most of your short sales right now and what you are doing that works. I have not looked at the business much from this point of view. With all of the bankd owned properties all over, what makes a short sale better than buying after the fact

The answer to this is simple. I have no competition when a seller has not already listed the property for sale. Realtors hate short sales and generally don't want to deal with them so they bring them to me.

I can negotiate with the bank to give me a discount anywhere from zero (that always sucks) to as much as 35%.

I do not close on the properties until I have found a buyer ready to purchase from me immediately. I use an "Option" contract allowing me to do business this way legally.

I never use my own money as transactional funders will lend me 100% as long as my buyer is ready to close asap behind me. This means I can buy as many as I can get my hands on.

I only own the property for a few days and make a great spread about 60% of the time.

For example I closed two deals last week. One I purchased for $200K on Tuesday, sold it for $250K on Thursday. The home appraised at $260K for the buyers lender. the second I purchased for $118K and sold for $140K the same day.

The short selling lender pays the listing agents commission and I pay the end buyers agent.

Not bad right?

Let me know if I can elaborate further.

I e-mailed a reply to you. Rich

So the bank does not want to see the property already on the MLS before they counter or accept your offer?

Sometimes they do. We usually do an Exclusive non-MLS listing to evidence to the lender that there is an agent involved.

I have heard of other investors simply giving the bank a commission agreement. You have to remember that most of the time, the negotiators are more interested in having a full package with all the necessary documents.

Chris, seems like you do it almost exactly how I do it as well so I can't fault you for that. It just means you're smart.

Are you having Janet/Mary's people negotiate for you or do you have your own negotiator and what do they charge?

I understand, and thats what I thought was happening. I just wanted to make sure I wasn't missing something. This is definitely a good business practice, and something I have always believed in. If you do the right thing by everyone you work with, you will succeed in business. Word of mouth is a very powerful marketing tool.

I'm a realtor in California and a looking to flip short sale listings to end buyer for profit. This is a great topic and this is exactly what I was looking for, very informative. I have couple of questions and I would really appreciate your help so that I can start investing soon and make profit and help more families to avoid foreclosure:

1. I was wondering whether I can do short sale flipping in California as a realtor
2. Do I have to list the property in mls, submit the offer and pending in mls on the same day or just submit the offer to bank without listing in mls?
3. Do you write your name or company name in the purchase contract?
4. You have mentioned that 100% amount is transaction funding, how about the EMD?
5. How much do you write as earnest money deposit and do you deposit your personal check at the first day of escrow opens after approval
6. How much do you offer to purchase? What reasons to you submit to lender to prove that property is worth only 70-80% of market value if there are no repairs.
7. When do you start looking for end buyers and how do you find your end buyers (I'm just starting and have no buyer list/investor list)
8. Do I need to disclose in purchase contract that I'm buying this for profit and will sell it for profit? What kinds of disclosures do you put and what kind of language do you use in your offer if I want to use realtor purchase contract?
9. I hope it is not illegal in California for a realtor to do short sale flipping - right?

Thanks for answering my newbie investor questions.