short sale flip success rate
I'm a newbie short sale investor in Los Angeles. I've started a yellow letter campaign, found 2 agents to work with so far. I've made one offer so far. So I have some "skin in the game" with this business. My problem is an expert investor I trust said short sale flips close only about 10% of the time. Aaaugghhh! This can't be right. Most of my info says investors close - close to 50%. What do you know about this?
I'm not sure but you could probably google short sale statistics
stay positive and learn as much as you can about short sale this is a very good site to learn from
Originally posted by Anthony Adderley:
My problem is an expert investor I trust said short sale flips close only about 10% of the time. Aaaugghhh! This can't be right. Most of my info says investors close - close to 50%. What do you know about this?
Based on some people I know doing SS flips, 10% sounds high and 50% is somebody's wet dream.
Originally posted by Mitch Kronowit:Originally posted by Anthony Adderley:
My problem is an expert investor I trust said short sale flips close only about 10% of the time. Aaaugghhh! This can't be right. Most of my info says investors close - close to 50%. What do you know about this?Based on some people I know doing SS flips, 10% sounds high and 50% is somebody's wet dream.
You should Google Patrick Precourt, he and his Partner Bob LeChance are very sucsessfull on the east coast and the giveout tons of info and SS products.
It depends on what you count as “closedâ€. If a spread can’t be achieved and you go directly A to C, I still count that as closed. It would be counted as closed in the statistics that you would pull off line, too. If you are talking about pure flips with no rehab, it all depends on:
• How well you know the current area market
• How good your negotiator is
• How good your listing agent is at establishing a true value for a quick sale
• If the market is stable, rising or falling
• How good of a job you do in communicating with sellers, agents, buyers, etc.
• Working with lenders to finance your C buyer is a must
• How efficient and fast you are in managing the flow of needed documents, etc.
• The work load of the lender
• Is there PMI
• The investor that owns the loan
• Murphy’s Law can hit you at any time!
Put it all together and it is a pretty good percentage, but you will never get them all! If you are doing 10%, get out of the business. You are doing the distressed seller a real disservice. You need to keep their interest first before your profit.
Bill
Originally posted by Anthony Adderley:
I've made one offer so far. So I have some "skin in the game" with this business.
Having skin in the game refers to having money invested in a deal, not making 1 offer on a property.
Bill has it right. Your investor who told you 10% probably has a bias not to do short sales. The most important thing is like any other sales transaction you need to qualify your seller. Once you learn that there is no reason why (if everybody involved knows what they are doing) you cannot close 50% or more of the deals. It would not surprise me if only 10% (or less) of the SS leads you find make sense to work deals with.
Find out what situations a seller can be in where you have a higher probability Of being successful . Then you have a better chance than one out of ten. Like one guy mentioned if there is pmi or not. Once you know how to qualify (i don't know either) then you're on your way To proving that guy you trust wrong .
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Real Estate Agent Florida (#BK3399275)
- L & E Property Holdings Inc
Originally posted by Bill Patterson:
It depends on what you count as “closedâ€.
Good point Bill. If we're simply talking what percentage of short sales APPROVED by the lender make it to close, I would hazard to say the "closing" rate is quite high. After all, the lender APPROVED it, didn't they?
I was thinking more along the lines of how many SS deals PURSUED, i.e., put under contract with a SS package submitted, actually result in a closed deal. I would say these are far less than 10%, based on the wheelers & dealers I know personally trying to make their millions with this approach.
Originally posted by Dan Favor:
You should Google Patrick Precourt, he and his Partner Bob LeChance are very sucsessfull on the east coast and the giveout tons of info and SS products.
Yes, apparently for $2,000.
BP is cheaper! :mrgreen:
As long as you realize that not every short sale will be a home run...and sometimes it is better to find a way to get a single or double and make some profit off it...then there is no reason you shouldnt be blowing away that 50% number. We have found that it is harder in last 6 months to get the home run deals (lenders asking for more, second lien holders not just settling for a few thousand...SPO language limiting flips..lending environment) but that lenders are also just as willing to postpone foreclosures. So if you cant get the price point that would allow you to buy, hold for the penatly time, resale at profit, ensure you build a process for capturing the other profits streams (ie, marketing for buyers, assignments fees, etc)