All Forum Posts by: Jeff Coga

#6 you got big hedge funds and syndications in LA... this means... there money cost them money each month... so they rather spend the money then pay out without "using the money"... so they buy properties... the operator of these funds aren't stupid... just keep churning

Dude... just hit the biggest wholesaler in your local area... pimp there properties out t your buyer list. Really it's that simple to do your 1st deal.

DO THIS AND YOU WILL BE 99% AHEAD OF THE PACK...

#1 - GET MLS ACCESS (figure it out)
#2 - Do a 1/2 mile search from subject for ALL listing, back-ups, pending, and sold (last 3 months only)
#3 - Run A "column search" -> so you can see data from left to right with all key information.
#4 - Make custom change to your "column search" by adding a "price per sq sold AND listed"
#5 - sort the columns for price/per/sq by highest to low...
$6 - You'll see a channel of prices... example range of High of $150 Per/sq to low of $75 this is the "channel"...

take the high side price per sq and multiply by subject...

**WHEN YOU DO THIS AND YOU DONT SEE A CHANNEL - RUN**

THEN go into what everyone else is saying aka pictures etc...

HUGE TIP...
Remember ARV is subjective... ON THE INVESTOR. Meaning the finishes of the rehab, materials, AND how the rehab investor (who you'll flip the contract to) does rehab... is it lip stick on a pig? is it move walls OR the #1 reason ARV moves higher is... if the rehabber adds sq to exisiting property...

So.. if your subject is 2/2 with living space at 1,200 you can add an exra bedroom and bathroom possibly... to turn the property into a 3/3. Do you get this?

That's what you need to focus on...

Just my 2 cent...

I've done boat loads of short sale flips so I know a thing or two.... so here's my humble opinion and 2 cent

Now... Jon, I don't know you from can of paint so please don't take it the wrong way... But I do have a question for you Jon...

What does this "discovery" do for the seller!??!?

Seems like you're in TX so it's a non-judicial foreclosure state... and on top of that it's shorter than any other state to foreclosue... this means seller is at high risk of foreclosure...

What's the seller doing about the foreclosure?

Are they currently in negotiations with a new offer? same offer? or did the bank flat out deny the offer?

If I'm reading this corretcly.. the ss bank said "no ss because it's vacant"... that maynot be the "full answer"...

Is this SS a HAFA short sale? If so... the seller will get up to $3k in relocation fee AND it must be primary resident..

If the seller moves out prior then HAFA is out the window.. but it doesnt mean you cant SS.

Also...

Let's really look at this... EMD for $2,500... lease it to the "buyer" first... the buyer started rehab and/or wrecked the place.

Now... at the end of the day.. what is all of this going to do for the seller?

Nothing... other than "he might" get $2,500 but now you have the daughter searching and finding evidence like Sherlock Holmes... Is $2,500 really worth the seller facing foreclosure?

In CA we have a arbitration clause in our standard board of realtor contract... if the buyer says F' you (if that same scenario in CA)... then he can tie up the property for months. Does this mean the bank won't foreclosure? Absoutly not...

So I guess my question is... what's the purpose of all of this?

Also...

My opinion... if the house is all jacked up... you can get a KILLER BPO and REALLY get a discount... which means... you'll be able to sell the house that much quicker...

Just MHO.

Property violation list is what you are looking for. I dont know your city so you need to do some re-con work. Easiest is to go into the housing department and/or building and safety and act like you are trying to help a friend/family... be like "ummm... my friend has some type of violation on the house and can't sell the house until he fixes it, I have no idea what that violation is or where to go, can you help me?"

Works wonders.

Call your local building and safety... or local housing authority...

Look for list for abatement and city violation list... I just simply walked into the building and started to befriend every one and in one day I found the source, for free.

So let me ask you this... just for kicks :lol:

What if I hired you as my buyers agent. And you found me a property that for sale as a FSBO w/ equity. Would you then have fiduciary responsibility to the seller?

MHO is no... If so, What if you did a single party compensation agreement... kind of like a FSBO and you represent me as the buyer looking to buy a distressed SS properties.

Joel understand I'm just asking this question just to ask...

Why because... I'm in California... and it's probably the MOST litigious state and that's the ONLY way I'm able to atleast cover my a$$.

I love these types of topics!

You gotta know your market place...

For example... we mail hard-core... that's our bread and butter... so I know a thing or two...

Plus... I'm asian so I track EVERYTHING.

Example...

Absentee owner in LA County doesn't work (MHO)... why because I've changed copies and response rate changes but actual contracts has been low... Plus... some how people ALWAYS have this perception that LA properties are high... and it's more of a battle... anyways... I've been able to convert some into "loan" leads (max. marketing cost)... but now solid deals (ok so we got listings too but no homeruns)...

here's the #'s

3659 mail pieces = 127 calls = AVG 3.4% response rate (which is dammm good D.M. but keep in mind some campaigns where low as .5% and high as 5%+)

Out of 127 calls = 11 appointment = 2 listing, 3 loans = Gross Rev = $19,562. We spent about $1.27 on AVG mail piece = Actual total was $4,996.71 for Q1 (haven't done Q2 yet)... I can go on and on.. BUT... my COST for my guys to go out and get the deals... and after splits (looking at the NET)... it came down to almost a 1:1 ratio... which SUCKS, escpeically when my team can go after other deals and make more money.... So I stopped this campaign.... even thou, my team was making money, I had better use of marketing capital somewhere else (make sense?)....

So.... my opinion is this...

Go after DISTRESSD/SELLERS like property violation list... IN Los Angeles I go after the REAP list, abatement list, fire burnt list... I know for FACT that other investor are tooo dam lazy to mail and KEEP TRACK of the data... and REALLY understand your business. Most sellers will say NO the 1st time... but countless of times... my guys have gotten the deal because of follow up...

Also...

We are NOT real estate investor... WE ARE in the arithmetic business... meaning... the #'s need to work out... and to do this... you just need to track EVERYTHING.

GL.

^^^ Jon is 100% right...

Don't get too caught up in that offer. Not to discourage you but... your offer probably won't get accepted unless you made a real bond with the listing agent... OR they'll just ask for highest and best offer.

You have only a few ways to close an REO.

1- Jon is 100% correct - banks won't let you pick your title and/or escrow unless you want to pay for it... No biggie if the #'s pencil out.

2- How do you close it? Close phyically with cash via t-funding OR use the end buyers fund and "make them the bank"...

Meaning... use a short-form deed of trust assignment of rent and at closing turn the cash-offer into a finance offer.

3 - ADD a buyer and quit claim your name off... you better do this early on in the game...

4 - Buy it in a trust... and sell the beneficial interest... it is MUCH cleaner and you don't need transactional funding to eat into your profit.

good luck.

I LOVE these type of talks... I've been fighting this for YEARS now...

Bill and Ned I love you insights... I've been quietly following this thread but now making a voice...

Here's my thoughts (someone who has closed over 60+ A-B-C SS closings)

Let's first define FRAUD: I'm sure many will agree... Fraud is intentional deception of "material fact" resulting in injury to another person/entity.

So... what happened in this case?

- In a SS Listing agent has fiduciary responsibility to the SELLER (not to the bank. 95% of folks get this wrong)

Now... what is fiduciary responsibility?

Its defined as an obligation to act in the best interest of another party. This type of obligation typically exists when one person places special trust and confidence in another person and that responsibility is accepted.

If so... does the "highest offer" mean it is the "Best Offer"... ABSOLUTELY NOT! A cash-offer that can close from a bona-fide investor is much better than a finance offer (MHO).

So... if the listing agent had a higher offer but if the seller "rejected it" then with all means no foul play... if the listing agent got a higher offer first... SAW the offer and made a lower offer after words.. then heck yeah that's hiding material fact...

BUT... this article doesn't even go into deals of the case... it a raaaa raaaa article to get views... (no biggie happens all the time)...

Now... Let's open this up even bigger...

take a look at this article...
http://www.freddiemac.com/news/blog/ed_haldeman/20100927_fighting_mortgage_fraud.html

Our lovely quasi government entity... and now our tax money shoulders...

Read it...

And you'll see this...

Freddie Mac’s article is no exception. NO SOLID LEGAL FACTS. There’s nothing instructive there.

I'm ALL for open market solutions to the housing and finance “crisis crap" (pardon my language)...

The solution is the use of small, private-investor assisted liquidation. For the difficult short sale properties when... and a MUST... with proper ethical principles that are followed by all involved and appropriate disclosures are provided.

For no rational reason (it's the government right) Freddie Mac apparently doesnt want this kind of assistance to help clear its non-performing assets.

Maybe because it reveals the magnitude of the losses they are creating. I dont know...

BUT...

Freddie Mac says that the problem with short sale flips is... that the industry professionals may work “against the borrower’s best interests by misleading the lender into settling for less than what an informed buyer would pay for the property.”

REALLY!?!?!?

Why the heck does Freddie feel that borrowers that are facing foreclosing shares the same “best interests.”
Few borrowers in foreclosure who I've talked to really feel their lender is sharing their best interests.You get my point?

So let's look at Freddi's statement...

1 - “A real estate agent in Pennsylvania recruited an associate to act as the buyer on the short sale of a property backed by a Freddie Mac-owned loan, for a price of $160,000. Simultaneously, the agent was marketing the property for sale as if the associate was the owner, and found a buyer unaware of the actual sale price who was willing to pay $225,000. Both loans were scheduled to close the same day.”

2- “Our fraud investigators were tipped off about the plan and successfully stopped it. But had the deal gone through, the new owner would have paid more than an informed buyer probably would have, Freddie Mac would have been denied a legitimate recovery, and the real estate agent would have fraudulently netted a $65,000 profit at the taxpayers’ expense.”

Hmmmm.... REALLY!?!?!?

Give yourself a big high five... but what did the fraud investigators “successfully” stop?

Seriously... Did they stop the $160,000 sale that Freddie already agreed to in open negotiations? Did they stop the $225,000 sale of the buyer “who was willing to pay” $225,000? Did they renegotiate the deal with either buyer? Did they let the $225,000 buyer close at that price but cut out the initial buyer who successfully negotiated a good deal? Just what did Freddie do? Who did it help? How?

BUT THE MOST IMPORTANT QUESTION IS...

When the F' did it become fraud in the United States market-based system to openly negotiate a good purchase price?

Hmmmm..... On to the next point...

The article states, “the real estate agent would have netted a $65,000 profit . . . ” I’m not sure how this would happen. How does all of the difference go to the agent’s commission?

There must be no closing costs, other commissions to pay, profit to the intermediary buyer, local transfer taxes, nor federal and state income taxes on the profits.

So is there any recognition that the $225,000 sale price would have raised the local comparable sales prices, collateral values and eventually the local property taxes. I would say HELL YES...

So...

Is it likely that the $225,000 was “more than an informed buyer would pay”?

Hmmmm... I dont think so.

If it was a financed buyer... the buyer’s lender would have one or more appraisals plus other strict lending requirements to assure that the new loan is properly secured. (HVCC, +20% increase w/ 2 appraisal etc)

We are NO LONGER in the days of easy money and manipulated appraisals (does it happen yeah but not like before).

So what if...

If it was a cash buyer, then the buyer likely would have been too sophisticated to pay too much.

And anyone on this site will agree that majority of cash buyers are tight-wad purchasers looking for discount properties. (i know I am)

Final thought and RANT

Either the $225,000 sale was not going to close in reality or else it was a reasonable market price, not “more than an informed buyer would pay.”

So what did it really do... not much other than make me type this long rant LOL.

Also..

Don't get it twisted. I KNOW there’s mortgage fraud out there... including a small percentage of short sale flips.

To Mr. Haldeman’s... his article provides a link to FBI mortgage fraud information.

But REALLLY (I'm sure you missed the link)... When someone reads the examples the FBI has successfully and properly prosecuted...

No wayyyyy do they do resemble the “case study” in any material way.

The link to the FBI web site MHO again... is merely a BS link to add legitimacy to a BS fallacious argument and example.

For the casual reader who won’t follow the link or understand what this all means... ALL IT DOES is create a sense of FEAR... on this investor-driven short sale transactions.

God Speed.

JC