What technique are you using to get paid on a short sale?

Question

I now have 2 contracts on some property and they both have a proof of funds letter I really donâ€™t want to send the proof of funds to BOA because that will see how much the buyers is buying the property for and they may want me to go up on my offer because of the buyers amount. Right now my spread is over a $100k. How are you guys get paid of your short sales deals? What are you putting on the HUD-1 to get paid? Someone at the title company said that other short sale agents are putting a CLEARED TITLE FEE on the HUD. Do anyone know if this will work or what technique are you using?

Thanks

P.S.
Is there now a limit on how much we can make off a Short Sell deal? I over heard someone saying this.

Thanks

P.S. 
Is there now a limit on how much we can make off a Short Sell deal? I over heard someone saying this.

James Ward · Answer

Jana,

You sound really confused!

There is NOTHING that states you can not make more than 20% from FHA.  The regulation states that if the Seller is selling the property for more than 20% of what they purchased the property for, the property MUST have a 2nd Appraisal and an Inspection.

If you are not clear on this, read over the FHA guidlines again.

But, do not limit yourself.

Nick J. · Answer

What are you talking about in regards to BofA seeing how much the end buyer is paying you?

Are you assuming you're going to be able to 'assign' these contracts?

I get paid by purchasing the short and then reselling A-B and then B-C. How exactly are you expecting to get paid? No offense, but did you just get done reading some outdated short sale guru course?

Limit the amount we're able to profit? Again, what exactly are you talking about? Who is telling you that and have you smacked them in the head yet?

Ted Akers · Answer

Nick already has this all squared away.....).  Especially with a large spread you do not want to even consider assigning.  You want to purchase the property in an A-B transaction and sell it to your end-buyer in a B-C transaction.  Wholesale and pre-foreclosure deals are assignable, not short sales!

What you are hearing may be that if you were to sell to an FHA buyer, and the increase from your purchase to your sell price is over 20%, the lender for your buyer may still lend on it but is going to thoroughly underwrite the loan and is likely to order a second appraisal (at your cost) and possibly an inspection.

BofA is also likely to restrict you from reselling for 30 days in item #10 of their approval, so you need your own funds or extended term transactional funding (maybe from this author) or hard money to close.  Don't let that one get away - maybe consider having someone guide you on this one and close that puppy.  P.S. - ask Nick nicely for some assistance.   :lol:

Angelica Gonzalezx · Answer

"The other way to make money is to sell the property directly A to C and just collect a Loss Mitigation Fee from the end buyer."
          
          Serg:
             Could you explain this better? how you do this?

I am flipping a shortsale to a friend and I want her to get the 8K first time home buyer credit. So, i was thinking to do back-to back closing but It will take some time and i do not think she will have enough time to get this credit. She needs to sign the contract before april 30th.
          
            Serg, could you or somebody else gives me a better and quicker  way to do this transaction and collect my fee? I am thinking to get 20-25K .
            
          Thanks.....
          Angelica
          Real estate Investor
[CONTACT INFO REMOVED]

Lafi S. · Answer

WOW! I had no idea that was true thanks guys for clarifying. I just backed off of an FHA buyer because of this.

Jana B. · Answer

Ted Akers,
          You are right I forgot to mention that was on a FHA loan that limited your spread to 20% I just wasn't sure if that was all S.S. deals with all the changes going on.

Sergio Loreto · Answer

Well, just like motiv8td said the first method to get paid is to purchase from the bank and resale to an end buyer or investor.

If your B to C buyer is a home owner and he is financing the purchase, It will be tough for you to get $100K spread. Specially if you have to disclose to the bank financing him how much you are making on the spread.

The other way to make money is to sell the property directly A to C and just collect a Loss Mitigation Fee from the end buyer.

Serg

What technique are you using to get paid on a short sale?

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