First I want to say I am glad I found this site.
My question is about Luxury home Flipping through short Sales. I got turned onto it by listening to a webinar held by a guy named Robb style of Florida. He was selling his system for $997. Would of paid for it but was afraid of being scammed.
In this webinar he describes how he would put a short sale offer into the bank. Then bring a short sale negotiator to deal with the bank. When he would final get a short sale approval from the bank, he would then go find a end buyer.
He said he had disclosure forms that would keep him from having to put earnest money down. And also had a transactional Lender help him do a back to back close. He stated that he would show how to get around the seasoning with the bank.
I was wondering if anyone could help me out with this process or even if it was possible. I have already track down some Transactional lender online. Never dealt with short sales and no nothing about these disclosures.
I Know how to find theses homes and how to market them. Looking for any help, comments, suggestions.
Thank You in advance
Welcome to BP!
Save your money it's all discussed here, there are no secrets in RE!
In reality the listing agent will set up a firewall with luxury homes, you'll be showing good funds before going inside!
And just go find a buyer? How are you going to approach Brad Pitt?
Well yes, luxury to me begins with a 10 million dollar home, maybe you meant "nice home", to do that, it's all here!
I just saved you $997, I hope. :)
Ditto what Bill said. There arwn't any secret tricks, only unworkable theories. No "disclosure" will avoid having to put up EM or provide proof of ability to purchase. We don't accept "POF" from Internet lenders/sources either. The "getting around seasoning" is nothing new, using a Land Trusts (which short sale lenders won't allow) or assigning/selling interests in an LLC.
Thanks Bill and Wayne for your response.
Nope I did not spend $997.
When I say luxury I meant over a 1M. He used an example like:
House FMV is 1.5M. Get a short sale approval for 1M turning around and selling the home for 1.2m to the end buyer
I have done lower end flips before but this method I wanted to try.
So, is their any right way to flip high end short sale other than buying the property , fixing it up wait for the seasoning then turning around and sell it.
I always eager to learn.
Your buyer will be the problem, while upper end properties are moving, you still have competition. Your holding period can be long and expensive. Your ability to access potential buyers is key, which was to my Brad comment above (he went to school with my son, LOL). 1.5M should be inline with comparable properties, you have a smaller market and you need to know what makes a winner to a more discriminating buyer, not just the average Joe. Flipping one would be along the same lines of building a 1.5m spec house, but worse since the spec would be new! :)
The assumption in the example is where the true fantasy lies. A short sale lender isn't going to let a property with a FMV of 1.5M, go for 1.0M.
Great Guys thank for letting me know this guy is selling smoke and mirrors. Will have to do more research and and put a plan together
Programs like this are so common and promise the dream but deliver the nightmare.
Sounds real easy and simple, right? If it really were, this person would be doing it and making $100k+ rather than selling some crap program for $1k.
Finding buyers for $1m properties typically takes a tad longer, secondly, banks are wise to this middleman process and make it as difficult as possible on you now.
Lastly, with the current market conditions, banks are not letting things go for much of a discount these days, so the example of a property bought at $1m that could sell in as is condition 30 days later for $1.5M is a fallacy at best.
To add to all the great replies above, banks will make you sign an affidavit at closing that say you don't have any other deals in the works with regard to the property. If you have already lined up an end-buyer, you will be committing fraud by signing this affidavit.
Sounds similar to this other "program":
I don't know much about the program in question but I stumbled across this post and I guess I am a little confused. It sounds like everyone is saying you can't short sell luxury homes. I am curious why it wouldn't work like any other A-B B-C short sale as long as you properly disclosed to all parties (seller, lender, and buyer) with appropriate addemdums, use transactional funds (they provide POF), and have the two separate stand alone closings? This way there is no holding period, right?
I would think the bank would be just as likely to agree to a $1MM property short sale as they would a $150K property short sale, maybe more so because it frees up a lot of cash in one shot. As an investor you should be able to turn a profit the same way you would with an average short sale, just on a larger scale.
Is my logic flawed somewhere? I am new to this so I could easily have missed something.
Bill, you are missing some key points. None of us are saying that banks don't approve short sales on $1M+ properties, what we are saying is that the spread to make it work by purchasing existing, selling existing and having a large enough spread along with finding that one buyer is difficult at best.
These programs promise things and state things that are just not likely.
A house worth $1.5M and a bank short sales this at $1M um what world does this exist so I can visit there?
@Will, Thanks clearing that up. I guess I just assumed that the spread would be proportional to what it is in the 3/2 housing market since it's the same process.
@James, ya wouldn't it be nice if $500K spreads were just growing on trees like that. I'd be happy if after paying everyone out, I made $20K, LOL
Bill I'm sure if they did grow on trees the hedge funds would beat us to them lol :)
A great wholesaler has the buyer first!
He 'finds the buyer after approval' so he can avoid any issues with non-disclosure of higher offers. It's not a bad idea, but I would still know WHO you are going to sell to from the beginning.
As far as 90-day seasoning .. just avoid banks that have that disclosure. (If you work with a short sale negotiator, they should be able to check their files and approval letters for these clauses).
You will probably want to do this with non-mls details to avoid agent road blocks.
Lastly, you will want an agreement that the buyer (who I assume is cash) will lend you funds to close on your side of the deal during the double closing. (They are not supposed to double-close with money just on paper)
Join the Largest Real Estate Investing Community
Basic membership is free, forever.