1st time wholesaler

6 Replies

I am just in the beginning talks with a motivated seller. He is 2 years behind on his mortgage. He has not been issued a foreclosure notice. From what he told me, the bank is willing to do a short sale and he would like me to talk with them. What can I expect when I talk with a bank directly? Is it smart to use the word wholesaler or investor? I have worked with sellers on lease options before, but this would be my first wholesale. I have no contracts signed with the seller, I am just gathering all of the information. I realize I have no numbers, so I am not sure this is a good deal for a cash buyer, but would love some advice on what to expect when talking directly with a bank.

Thank you!

Howdy!

I'm not a shortsale expert. I've been given a hard time for wholesaling one before on here.

First things first.

Get accurate values on what the house is worth today, and what it is worth fixed up. Also what it would rent for. Then at least we can evaluate this from an investor stand point.

Beyond that, you are probably going to need to bring in a short sale expert to work with on the deal. I'm limited in my experience so that's about all I have BUT if you come here to talk about a deal. You gotta know the numbers on the deal! :)

Originally posted by @Jana Gruttner :
I am just in the beginning talks with a motivated seller. He is 2 years behind on his mortgage. He has not been issued a foreclosure notice. From what he told me, the bank is willing to do a short sale and he would like me to talk with them. What can I expect when I talk with a bank directly? Is it smart to use the word wholesaler or investor? I have worked with sellers on lease options before, but this would be my first wholesale. I have no contracts signed with the seller, I am just gathering all of the information. I realize I have no numbers, so I am not sure this is a good deal for a cash buyer, but would love some advice on what to expect when talking directly with a bank.

Thank you!

Jana,

First off, congratulations in moving forward and even speaking to a seller, period. I hope you build confidence with each day that passes.

Shortsale (assumption you've done your due diligence about the home, area, and numbers)... If you are moving forward with a shortsale, there is no need to tell them anything other than you are a buyer.

Now assuming you are successful with providing the shortsale application, etc... Not to mention locking up the property with a sales contract with the seller. Regardless, if moot with the bank, you need to protect yourself from outsiders zeroing in on the deal once you start work or the owner having other ideas.

The bank ultimately will have the typical process when it comes to shortsale or application (qualifying to be unqualified) which can range on average three to six months and sometimes shorter or longer.

You will have to retrieve all info from seller and as much paperwork as possible after you have signed a contract and most importantly, a Authorization to Release Information (which will allow you to dialogue with the bank).

The bank will retrieve a Broker Price Opinion (BPO) of the home and in essence see if in fact is upside down to even do a shortsale. This is done with additional consideration of what the client actually owes on the property.

That BPO is powerful and will dictate whether you can even make a profit. Again assuming you are using an After Repair Value (ARV). You may have to use a private lender or transactional funding to pull this off. If there is a large spread, you can even use a Hard Money Lender (HML) to close the deal, then resale to an exit buyer who is ready to close with cash. Maybe even partner up via Joint Venture.

It truly depends on the home, location, and the numbers to see if in fact it is even worth it. Not to mention the ability to find a qualified buyer (investor/lender/retail).

I don't know the Lease Option (LO) laws in Wisconsin, but it will be difficult to do this with a shortsale. Once or If, a shortsale is approved, you will need to close quickly. Just in case it was a thought.

As for talking with the bank, you will probably be talking to dozens of reps regarding this account. Usually there is an account manager specifically for this client, however I have found I usually end up speaking to multiple parties regarding the account.

This is an time intensive and consuming aspect of real estate but if successful can produce substantial profits. On the other hand, they could run you through the ringer only to renege of the deal and proceed with foreclosure, listing for what is owed, or other.

Lastly, it also depends on who the bank is... there are just so many tangibles and intangibles to even give a specific answer. Especially, without any numbers or general info.

Either way, I hope this helps.

Just my two pesos.

Big Henry

Originally posted by @Tim Gordon :
Howdy!

I'm not a shortsale expert. I've been given a hard time for wholesaling one before on here.

First things first.

Get accurate values on what the house is worth today, and what it is worth fixed up. Also what it would rent for. Then at least we can evaluate this from an investor stand point.

Beyond that, you are probably going to need to bring in a short sale expert to work with on the deal. I'm limited in my experience so that's about all I have BUT if you come here to talk about a deal. You gotta know the numbers on the deal! :)

Given a hard time for wholesaling a short sale? I dont know who would give you a hard time for a legal strategy. I wholesale short sales all the time.

To the OP, I wouldnt mention you are an investor or wholesaler. The bank frankly does not care. Some banks and STATES require a real estate agent to be involved facilitating the short sale, so you might want to investigate that. If this is your FIRST short sale, get help, for the love of everything good and holy you will need help.

Anson Young, Real Estate Agent in CO (#14161n)
303-475-9999

Jana, congratulations on taking action and being in front of the homeowner. I suggest that you not be the one speaking to the bank. You are the investor making the offer on the property. Banks generally require that a realtor be involved. The realtor would be the contact with the bank, and also usually prepare the short sale package; which will includes a hardship letter, financials and tax returns, and a short sale form usually specific to that bank.

As @Anson Young mentioned you want help if you are new to the short sale business; as it is more involved and time consuming than other strategies, but can also be very rewarding. You want a realtor VERY familiar with short sales and who is an effective negotiator, or I think better yet a third party short sale negotiator. You do want to look at your resale numbers to determine your offer price and want to start with a fairly low offer, (knowing that it is more difficult to negotiate discounts with the banks in this low inventory environment) and get it under contract with the homeowner. States differ on short sale contract requirements but most do have a specific short sale contract or short sale addendum - your realtor listing agent should know what is required. Although help is suggested here it is not rocket science and can be done with patience and perseverance.

720-291-9100

Thank you all for your advice! It is very much appreciated. I am going to get some further information on this to find out if it is a deal. When I get all the info, I will fill you all in!

Again, thank you for taking the time to respond to me. It is such a big help.

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