All Forum Posts by: Mitch Freed

Buy and hold is a great strategy if you have enough liquid to support it.

I buy and lease option a certain number of properties each month and I try and get at least 10K up front on each lease option. But I still need to get lump sums of cash coming in to cover operating expenses, repair costs, overhead etc.. and the best way to get these lump sums is through quick flips, assignments, back to back closings etc... Buy and Hold is great but I firmly believe it should be combined with a strategy of quick flips to keep the big bucks rolling in.

I would advise the best way to get a short sale on contract is with an option agreement for purchase and sales. Pay the homeowner $10 for an option to purchase within a time frame that you set that is long enought to negotiate a short and find an end buyer. The option agreement will look just like a purchase and sales to the lender, they won't even know the difference...all they see is the purchase price you write on there...which the agreement will state is based on an estimated debt and may change due to negotiations. The paperwork is simple and the homeowner will feel much less threatened versus the other options of land trusts, deed transfers etc..and you are just as secure.

I have a few short sales with accepted offers and I have some end buyers who would like to step into my shoes and close the deals instead of me. They have agreed to pay me an assignment fee but asked that I put together an assignment of contract that they can sign and have everything on paper. Does anybody have a good assignment of contract that I might be able to take a look at to give me some ideas? Thanks!

Has anybody here had any experience buying notes that are in default? If so, can you share a success story and how you got there?

Thanks

I realize that banks don't pay realtors "full" commission. What I meant was realtors receiving the full amount that was alloted to them by the bank and not paying the loss mit fee out of that commission.

If you want to go through each word in my post and pick it apart be my guest but I wouldnt waste my time pointing out the obvious and would like to stick to the main topic.

Steps 1 through 16 are the job of the agent...no doubt about it. You signed up to do all that...and thats what you get paid to do. If you find a buyer who closes the deal then you get paid. The buyer has nothing to do with your responsibilities to your client and has no duty to look out for your client. So why would they pay a loss mit fee to a negotiator who was hired by YOU!?

There is also no question that everything is a matter of frugality in this market. An investor is going to negotiate the best deal possible. As an investor...if I was presented with a loss mit fee to be paid out of my pocket instead of the listing agent's then I'm going straight to the seller and explaining to them how their agent is convoluting this deal and seeya at auction.

There are simply too many listings on the market for people to choose from for you to charge them to close a deal on yours.

How great a deal it is has no relevance at all. How much money the investor stands to make on the deal is irrelevant as well.

Bottom line...your client isn't paying their mortgage...they need to sell for less than they owe....you need to find them a buyer...you get paid for that...if you can't close it on your own...you pay somebody to help.

Don't like it? Don't list short sales.

Would you turn away a cash buyer if they refused to pay the $1K fee...would that be looking out for the best interest of your client?

My thought is...if the seller's agent takes on the task of the short sale and needs to hire outside help to get the deal negotiated then the fee needs to come out of their commission.

Charging the buyer a fee to have the short sale negotiated is almost like saying it's the buyers problem that the home is in short sale in the first place...but it's really the bank's and the seller's problem. The bank is the one paying commission to the listing agent and therefore the listing agent needs to pay the short sale company the fee.

Johnston...you stated that the buyer should pay the fee...but why? The seller's agent needed outside help to negotiate the deal. Why should he/she get paid a full commission for outsourcing work? You would pay a referral fee to another agent if they gave you the listing right?

They buyer is already paying a fee for the agents to do their job...if they need to outsource...whose problem is that?

Well the seller won't be paying anything if this is a short sale. The fee paid to the "short sale company" comes out of the listing agent's commission.

What probably happened is that the agent took on the listing before the seller stopped making their payments and later on found themselves in a situation that they couldn't handle. Once they realized the home wasn't going to sell for more than what their client owed the bank, they brought in a 3rd party, the "short sale company" to take care of the paperwork, negotiate with the bank, etc... that is all a short sale company can do.

The process doesn't always take 60 days...it may take more or less depending on the status of the file in loss mitigation. I would find out how they came to an asking price of 120K. Did the bank do their BPO (brokers price opinion) and tell the listing agent it was ok to list at 120K? Or did the listing agent just decide to drop it really low to get an offer?

If the bank has already done their BPO and verbally approved a purchase price of 120K then your offer shouldn't take long to be approved and then closed. However, if the short sale company is attempting to negotiate the 120K vs. some other value that the bank got from their agent...then it could take a while and the bank may counter or flat out reject.

Overall, you shouldn't pay a fee for anything...you make an offer at the asking price and simply wait it out. If anybody pays a fee to get the deal to close it should be the agents involved because they are the ones contracting outside help...and in a short sale ultimately the bank is the one paying the agents and indirectly the fee.

I hope that helps...good luck!

Might anybody have a sample contract that a bird dog might use to secure his/her interest in the property if the investor purchases it?

Thanks!

I haven't been involved with a transaction where the homeowner has agreed to sign the note but I have seen it threatened many times.

However, some real estate agent friends of mine have been on the buying side of the short sale and actually seen sellers sign the promissory notes to get deal closed.

I have a friend who works as an agent part time but her full time job is loss mitigation for the Wells Fargo Jr. Lien Division...she informed me they are taking 3-6% of what is fully owed on Jr Liens but consequently requiring homeowners to sign promissory notes for the difference. But, like SoCal stated...that is probably another scare tactic.

Johnstone...ill search my laptop tonight and post up that addendum as an attachment.

And yea...the bigger firms need to cover all their bases. You can get more creative with your transactions if you work with a small time principal broker who doesn't have to deal with all the inter-office politics that go along with the large firms.

Perhaps we are in the wrong business ;)