SHORT SALE PROFITABILITY?

Question

To those who do short sales:

How long does it take on the average, for you to get your money, from the day you find a property to the closing table?

On the average, what is the profit on each deal? Or, if you're too shy about mentioning dollar amounts, what is the per centage profit of the sale amount?

Others would probably like to know if they are above or below the average.

James Ward · Answer

Here you go:

1) Average time from day of meeting a Property Owner to close- anywhere from 8 weeks to many months.  As I looked over things the average now is about 10-12 weeks.  But many different factors come into play.
2) Average "profit"- This also depends on many items, but about $15,000- $20,000 is a good range.  
3) TIme frame for someone just starting- I would plan on about 5-9 months.  Also, many items make this change.
4) Why do Short Sales- not only can you make money, but you actually can assist people in a time of need.

As you all can see, I say many times here that several factors will change things.  There are so many different ways to perform Short Sales and many other ways to profit.  I truly can state- no two(2) investors do it the same way.  It all depends on; your business plan, your team, your local area, your local/state laws, and I could go on and on.

Enjoy!

Maryann L. · Answer

On the few I've closed I'd say I'm looking at 6 mo start to finish  I want it to be closer to 4 mo, but LOL...I want a lot of other things too, but can't say what will happen.

Profit varied.  $30,000 for one and $10,000 for another and I just accepted one that should yeild a $50,000 when it closes.  I can't ever say.  If I had to, I'd like at least $30,000 for each one, and if we get more, I'll be very happy, if we get less, I'll be happy so long as I'm making $$ and not losing money on it.

Sam M. · Answer

To run a successful business in SS's one must always be working as many deals as possible. One canâ€™t wait for one deal to close before pursuing the next. 
          
           I put my first two deals under contract in early May. One likely fell apart (foreclosure) but isnâ€™t totally dead yet and the other in nearing approval and I should net 54k or so (Purchase FSBO for 115k and sell at 185k). I have put an inordinate amount of time into these with the Association of Realtors, educating the title company and broker and hope to be considerably more efficient from here on out. I just started marketing heavy again. Several deals I thought I had in the bag turned into no deal at all because of homeowner apathy. Can't win them all :) 
          
           It would be nice to have one under my belt so I can â€œproveâ€ they can be done. It would help my confidence a little. I am not lacking in confidence per say but adding experience would help give me an added boost to look the naysayer in the eye and tell them I have already done it so they can either get on board or I will find someone who will.

Nick J. · Answer

the amount of time always vary. I never stress it too much because the ones you think will be quick take 6 months. I've got an approval, closed and resold within 4 weeks before but of course that isn't typical.

I average 25-30k per deal.James has a boatload of deals of mine that he's negotiating and I expect the same for those as well. I know one that we're getting an approval on I'm looking at $70k profit but that isn't typical in the price I deal with.

Since I literally don't do anything other than sign contracts,and sometimes I don't even do that thanks to Docusign and my kids who know how to complete it for me, its totally worth the time it takes.

Scott Allan · Answer

I am making some of my best money right now in short sales.  Problem is there is a wait typically.  I started investing in short sales in Florida 6 months ago.  Only about 2 months ago have I started seeing profits.

I buy to flip.  Most of my homes are very cookie cutter $50-$60k range built 2004 or newer.  Structurally everything is good.  I do some nice landscaping, paint the inside, re-do flooring if necessary, etc.  The availability of USDA financing is helping me move my homes to primary borrowers where the marginal difference between cash buyers and financing buyers is pretty favorable.

In my situation it took 2 months approximately on average to get short sale approval and another 2-3 months to get an offer and close with an end-user buyer.  I am averaging 20% ROI per home.

So my opinion is if done right and you have patience, they are just as good, if not better than REO's.  I have found it helpful to offer a CMA with my offer to the seller/bank.  Most of the times they ignore it but I have had good feedback from some.

Account Closed · Answer

Great post James.  I'd say you're right on with the 5-9 months for someone just starting.  If I remember right, I first spoke with you and Nick back in early February.  Of course there's been a lot of learning, trial and error, and deals, leads and realtors that have fallen through since then.

So I'm heading into month number 6 since deciding to pursue this.  I've had one file sent to James that unfortunately was just too close to the sale date, another that was a BofA that just wasn't worth the headache, and just sent a new file just this week.  I was also talking with a friend last night and out of no where he told me about a guy that he works with that split with his wife and walked away from his home.  I have a call scheduled with him tonight and hope to have it under contract and the file on James desk by the end of next week.

Because I work such a screwed up schedule, 12 hour shifts rotating days to nights, 7 days a week, I was able to find an awesome VA that was willing to work on commission only.  She gets paid if I get paid.  I get the leads together and she makes the majority of the calls.  The contract that I signed this week was the result of a call she had made for me.  She placed calls to 27 leads, was only able to speak to one personally, left 7 messages, and I was able to get one under contract.  I wish they all could come that quickly and easily!

I'm sure things could've happened a little sooner, but at first I was waiting for the magic one to fall in my lap.  I increased my efforts in getting quality leads, got the word out, hired a good VA to assist me and I'm now starting to see things falling into place.

And of course I've had dozens of calls and emails with James and Nick over the past few months.  Thanks for all your help and encouragement along the way.  You guys are awesome!

Kyle

Bill Gulley · Answer

Thanks James, that's great info! There is a learning curve to everything, hopefully others can touch on that as well.

Another thought too, SS, due to the players involved, seems to require a level of sophistication of those doing such deals, a newbie might have a problem relating to the bank SS depatment. So, wht limitations are there in this respect, are seasoned pros like James required to get these deals mthrough? How many people are involved for a slice of those profits?

Bill Gulley · Answer

Ah Nick, that's just one deal, not an average, just off the top of your head, nothing that causes brain damage here, LOL. Like last year I did 1,000 deals and made 90,000,000 so that's 90,000 a deal, so the average would be 90K and it took about 45 days....now that's an exageragtion I know.

The average time it takes as you did maybe when you got started and what it takes now, that would be even better, trust me here....the point will be clearer later on, but those starting out what should they expect and if they get in the grove, maybe in a partnership fo some kind, does that pay to take that route...Thanks, Later

Nick J. · Answer

I put a call into James. What I'll do is get the time frame and profit % nailed down on an actual deal we're about to close on any day now(as soon as he gets the approval letter).

This of course will only be one example of many different possible scenarios but at least it will be a real example. My expectations are similar to Maryann's.

Bill Gulley · Answer

I think Nick sees what I'm asking here. And in Nicks' case dealing in tons of deals with James, I'm sure it's a profitable deal. But what is the average as a percentage of the sale price Nick and how long does it take for a deal on the average?

Sam, good luck in starting out, you're in the learning curve (and I guess the "teaching" curve with others) to get your system worked out and start cranking.

Tim, we will probably be addressing that. I'd like to see some stats on deals done by those who do it. I imagine it will be all over the place, but what you'll see is a big difference between those doing deals for a couple of years and in volume and those entering this market and who have knocked down say, less than ten deals.

Knowing what these averages are, hopefully across the country, we might help others interested in getting into SS to tie up with a larger producer.....then again, they may decide to do something else with their time.

Let's just look at the average profit in the average period of time.

SHORT SALE PROFITABILITY?

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