Short Sale Time Machine Part II – Filling Your Pipeline with Deals for the Future

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Ok, if you could track with part I of the Short Sale Time Machine, lets kick it up a few notches.  Lets get into the nitty gritty of how this works!  Enter the time machine!

“Past me” ‘s job is to pipeline deals for future me to cash in on.  In the process of time traveling (in real time, unfortunately), the market can do its thing and future me is OK either way.  The idea is that short sales take TIME to complete.  Depending on the bank, we could be talking 3 months, or 2 years.  Obnoxious, right?  Well, not too bad if we are consistently shoving deals in the pipeline, when they finally pop out the other side for cashing in on them, we might just make out like bandits!  Here is how:

1. Getting the Deals!

This is probably the more difficult part, or not, depending on your market and your short sale situations.  The idea is to get 2-7 of these under contract EVERY MONTH.  In the natural course of things, some will fall through (negotiator at the bank is terrible, seller’s situation is rejected, etc), some the offer will just be too low, and the golden children will pop out and ready for you to close on at the price you need.

One note: Colorado has an earnest money deadline section of the contract, I always put SSA+2 days.  Which means I don’t have to put earnest money down until 2 days after we have a short sale approval in hand.  Great for me!  Now, how do I stuff the pipeline?

A. Realtors – network with good agents, letting them double end the deal if they put in my offer, etc.  Most agents do not put in a starter offer, basically a lowball cash offer that gets the short sale process going.  This can be very beneficial, if the property sits too long without any activity, the bank might just not extend foreclosure any longer and let it go to sale.  With an offer in hand, they have something to work with and are actually progressing the file forward!

B. MLS – Lots of short sales there, lets put offers in on as many as possible!

C. Marketing – It’s quite simple:  get NED list or the 30/60/90 day mortgage late list, knock on doors or direct mail as many as you can.  These people are on short time frames, between 1-4 months before it goes to foreclosure auction.  Many have motivation, they just don’t know their options.  If I get a call from someone on this list, my close rate is high on getting them to sign an offer and start the process.  Once their head is out of the sand, the motivation is there.

2. Negotiating the Deals!

This is something I no longer do.  Did I enjoy being passed around to several apathetic individuals at bank call centers all day while listening to their excuses of how they lost the paperwork… again.  Not exactly.  It is a HUGE time consuming and soul sucking process.  This is mainly for when I’m marketing for short sale leads and handling that piece internally, and have the deal in that part of my pipeline.  Normal straight off MLS deals and straight from other agents.

  A. Short sale negotiator These are the heavy hitters I now hire to facilitate short sales.  Professionals who don’t mind yelling at bank employees all day.  They usually charge 1% or $1500, for a time vs. cost savings, I wish I did have a time machine so I can go back to 2006 and smack past me upside the head and tell him he is wasting his time doing this himself.  My guy does the processing and negotiating for short sales in all states, he is amazing.

B. Agent Some agents love doing this work, then again, some people love blood pudding; you can’t explain everything.  A great short sale agent is amazing to have, but not all agents are great at short sales.  Find an amazing one, and they will love you for sending them a ton of leads.

As a side note, this is how I deal with short sale leads that I market for.  Since I’m a licensed agent, I have to be careful on how I handle this as a buyer.  I will ALWAYS be acting as a principal ONLY in the transaction, I hand off representation of the seller to another agent, usually a friend of mine.  Most banks don’t let the buyer also be the selling agent for a short sale, and most real estate commissions frown on it as well.  I use my short sale negotiator, and the seller is represented by an agent.  It removes my liability from the equation.

3. It’s APPROVAL Time!

Time traveling in real-time isn’t as exciting as a Delorian or a hot tub, but this is the exact part we are looking forward to.  Approval!  Now, at this time the bank (and you) valued the property WAY back at offer time.  Hopefully the appraisal or BPO got extended from that time period (usually do).  What does that mean?

  A. If the market went DOWN If during this adventure the market started ticking downwards, and you feel that you are now OVERPAYING for the property, or that it is no longer a deal, you have options.

One is to contest the BPO, show that comps have gone down, sales are slumping and the property is just not worth what it was.  Worst case scenario?  You can back out of the contract you should have other clauses in the contract, like inspection or something similar, and you can then back out.  Also, the price they are trying to negotiate isn’t the price you and the seller agreed on, most stated allow an out based on this as well.

B. If the market went UP Party! This is the best case scenario.  Let me tell you about one that is closing this month.  We have been working this short sale since October 2012.  We finally got our approval letter using…  appraisal from… October 2012!  The market has gone up easily 10% in that area due to demand.  I’m buying this house in November of 2013 at a price from 13 months ago!  We are roughly 55% of ARV, needing maybe $10k in cosmetics (I was SHOCKED the appraisal was so low, THEN they extended the appraisal pricing until closing which is the point of this article).  We should net $50k on the flip.

That is powerful.  Real Estate markets don’t change overnight, that is for sure.  But a 6-24 month freeze on a price can be easily an extra $10-20k made on a deal.

Now, fellow time travelers, go forth and shove as many of these into your pipeline as possible.  It’s a good bet you will squeeze gold out the other side.

JD Hancock

About Author

Anson Young

Anson Young is the owner of Anson Property Group based in Denver, Colorado, which specializes in distressed property purchases, and author of Finding and Funding Great Deals. As a full-time real estate investor and agent for the past 10 years, he has completed over 100 wholesale deals and 75 flips. Anson Property Group is committed to changing communities, helping homeowners, and building long-term wealth. When not working, Anson can be found exploring the wilds of Colorado by hiking the Rocky Mountains with his family, reading favorite books to his son, and attending loud rock concerts.


  1. Great article! So if you get 2-7 deals under contract each month, how many per month on the other end of the pipeline are you actually closing on? Do you ever end up running out of cash/resources to close the deal by the time it goes through 12-24 months down the line?

        • If there is no deed restriction imposed by the bank, you can wholesale a short sale via double close just like you would any other property. If there IS a deed restriction, you will have to go around it with a land contract or an LLC sale to ‘wholesale’ the property (transfer ownership without transferring title).

  2. Hi all, I can answer Mark’s question. If it’s a lead that I like that happens to require a short sale, I contact my super-short-sale-listing-agent-colleague and ask him to handle the listing. He has a full negotiating team in place and they do a great job. I then use another agent-colleague to represent me as the seller.

    The only obstacle I’ve found with this is that while many sellers may want the end result of a short sale, not every seller wants to or is able to do all the grinding documentation to get the sale started. Therefore I qualify the sellers for motivation and organization before I connect them with the listing agent. That way I’m not passing him a bunch of non-performing sellers.

    If it’s an MLS listing, I do ask some questions about who is negotiating the short sale for the seller before submitting a contract. I’ve gotten burned with listing agents who were not able to bring the short sale to conclusion and that’s not a fun place to be.

  3. Great little article, Thanks for that.

    Question – I have a pre-foreclosure lead that will require short sale (my first SS). I am picking up from your article that I can get the house under contract with the bank (mortgage service company in this case) prior to the short-sale agreements being inked? …and then subsequently get it on MLS and in a pending status if approved…? My impression was that the bank would want MLS submission prior to contract so they could get best “market price” offer.

    Thanks in advance!

    • Adam, I get the property under contract with the seller/owner, then start the short sale process with the bank. If the bank requires an MLS printout, we provide one, but the seller has signed a contract, therefore its under contract. Some smaller banks want a certain number of days of MLS exposure before going under contract, but most dont (big ones, like BOA/nationastar/chase/wells dont care, as long as the offer meets their net they are good).

  4. I also find the listing and putting under agreement immediately interesting.
    I am surprised that hasn’t gotten more pushback, assuming your offers suck for them. 🙂

    The short sale specialists that I know around here usually have it on the market for a while. Usually overpriced (At lest based on current condition) and then drop it a couple times to show that it was out there and nobody wanted it at “reasonable” prices so lets work with these guys and there solid offer to cut the loses.

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