Why Do Real Estate Agents Need Our Help?
One Simple Reason…..
Real Estate Professionals are not closing out their short sale transactions
because they lack the solid knowledge and education necessary
to work their leads to consistent closing.
Our product follows a very simple system that has been proven to get Short Sale deals CLOSED! We teach you how to stop chasing “Dog” deals and spend time on the deals that have a better chance of closing. Once you pre-qualify your deal our product tells you from A to Z how to close the short sale deal. To master short sales, access our membership site to get updates on short sale trends, news, and to collaborate with other short sale professionals.
Just what is a short sale?
Short sales are a specialized strategy for buying properties at below market value. Short sales have not been widely used in recent years, but are a great option for the current buyer’s market.
A short sale is required when the purchase price is insufficient to completely pay off all current liens on the property (mortgages, taxes, HOA fees, etc.). These lien holders (lenders, note holders) will need to agree to a negotiated payoff amount in exchange for releasing their liens on the property. Every short sale is unique and reviewed on a case by case basis with the lender.
Instead of buying from a seller, you are purchasing the property directly from the lender for a discount.
Why get involved with a short sale transaction?
Foreclosures are at an all time high, which basically translates into more opportunities for you. Since foreclosures are increasing, this is the perfect time to jump into this because there will be more and more lenders discounting properties. It is safe to say that most lenders will accept a short sale, however, you may come across one or two lenders who will not discount. If the numbers work out for the lender they will do it.
Why would a lender accept a discount on a mortgage?
A lender may accept (approve) a discount on a mortgage to avoid a possible foreclosure auction or bankruptcy. They could lose a lot more money if the property goes to auction. There are so many fees involved if the property goes to auction, that they would be better off taking the discount beforehand and moving the bad loan off their books.
If the property turns into a REO (Real Estate Owned) property, the home may sit for months costing the lender additional holding costs. The money recovered through a short sale can end up being more than if they tried to sell it as a REO.
Banks do not like excess inventory and bad loans on their books. If there is an opportunity where they can sell the property without a huge loss, they will do it.
When is the best time to start my client on a short sale?
It is best to do a short sale when the property is in the pre-foreclosure state. Yes, you can perform a short sale when the bank owns the property, however your profits will more than likely be smaller. There are two stages within pre-foreclosure. The first stage being those individuals who are behind on payments and the second stage are those who are behind on payments with a notice of default.
In order for this to work properly and for you to successfully get a short sale, you must find the homeowners who are in the second stage of pre-foreclosure or more than 3 payments behind on their mortgage. Once the notice of default has been recorded, banks become motivated as well, so you are more likely to get a discount. Until that time, very rarely will a bank ever discount a mortgage that soon. Why would they? The homeowners still have time to cure the loan and make up the back payments.
How do short sales work?
Short sale is the most effective strategy for discounting loans on real estate. Once an offer is made on a property, it is submitted to the foreclosing lender. If more than offer is received, the highest offer gets submitted. If there is a junior lien holder on record, a separate short sale packet will need to be submitted for approval. ??When the lender gets the short sale packet, the lender orders a BPO (Broker’s Priced Opinion). This provides a value to the lender to determine their net equity they will receive for the short sale. At this point the lender will either give an approval or decline the offer, which would spur negotiations. ?
If an approval is provided by all lien holders, the purchase transaction will be able to close. The whole process can be as fast as 30 days but can take as long as six months. This is depends on the lender’s ability to make a decision on a short sale file.