Short sale investors see this new trend with concern, especially since some lenders have said that they find deed-in-lieu transactions preferable to short sale transactions since they don’t take as long. Also, homeowners who are going to lose their homes anyway may find this to be a more acceptable alternative since it is being portrayed as a route to 100% resolving the debt rather than worrying about being followed up with later for the remainder just when you have gotten back on your feet.

As a short sale investor, you should not stress about this. There are several homes that will still go through the short sale process, and not all circumstances are going to qualify for a deed-in-lieu transaction. You can point out to homeowners who may be backing out of a short sale that unless the wording in their deed-in-lieu agreement specifies that the debt is considered entirely resolved by the return of the property, as this may not be the case.

Furthermore, while both deed-in-lieu and a short sale do go on your credit history and negatively impact your credit score, a deed-in-lieu remains on your history for a full 7 years, and you may have to request that it be removed. According to new legislation, short sales may be removed as soon as 3 years in some cases.

In fact, some homeowners may opt for a deed-in-lieu transaction in place of a short sale transaction with you. Nevertheless, the current deed-in-lieu “push” could actually be good, since it may put a notch in homes that lenders were unwilling to short sell anyway. Just be willing to answer questions about this sort of transaction, then keep doing your short sales and helping individuals in trouble resolve their housing scenarios.

For more great short sale tips visit www.FreeShortSaleCourse.com

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One of the largest setbacks for landlord-sellers negotiating short sales is that even in states that do not assess an income tax on conventional short sales in which a homeowner transacts a short sale on the home that he or she lives in, the short sale of a rental property often will result in the issuance of a 10-99 that will be viewed by the state as income. There are ways to deal with this and to appeal it, but when dealing with landlords you must remember that these individuals are subject to a different set of tax laws if they are short selling rental properties.

Also, landlords may find themselves in a distressed situation thanks to insurance issues. Particularly if they have made a claim recently, the insurance company may have hiked their rates or even canceled their policies. Due to plummeting equity in many properties and a number of natural disasters in recent months, finding new insurance for rental properties has been for the most part difficult.

While this may not impact your end buyer, it can impact you or another investor who is purchasing the property to hold or season. Make sure that the property is insured and insurable by you even if you do not plan to hold onto it.

As the rules on short sales change nearly day-to-day, investors much keep ahead of the changes. Only in this manner can you truly help distressed property owners who need a short sale in order to salvage their investments and exit a property.

PS if you haven’t checked out my Free Short Sale Course you are really missing outwww.FreeShortSaleCourse.com

categories: real estate, real estate investing, short sale investing, preforeclosures

Probably the most straightforward way to handle this disclosure is to include the fact that you are doing a short sale in the contract that deals with the transaction. Do not leave anything to chance. Note that you are doing a short sale, how the lenders will be satisfied and make sure that the contract itself allows for the resale of the property, should you elect to do so. You will be on firmer ground if you decide to “flip” the short sale if both the lender and the seller are aware that you may opt to do this.

In addition, many investors and real estate agents are recommending that you stay in touch with all lenders, even if they are the holders of secondary or tertiary loans and are less likely to get any direct satisfaction from a short sale. Making sure that the negotiation meets everyone’s needs or at least addresses their stake in the property can help prevent lenders from coming after homeowners later for the payoff of the remainder of the investment.

Also if you are listing the property in MLS, you may also opt to disclose the fact that the property is a short sale – or that the owner, lender or both or open to a short sale – in the listing. Not only will this attract more attention to your listing since short sales are generally perceived to be a good way to purchase a property at a discount, but it will also cover your disclosure bases and make sure that there is no question in anyone’s mind that the transaction that you are negotiating is a short sale.

Ultimately, you can create a great deal of wealth, resolve serious financial crises for people in need, and help stem the tide of foreclosures in the country by being an effective short sale negotiator. However, you must be very careful to “dot your I’s and cross your T’s” when you are doing a short sale. Make sure that every aspect of your behavior and your negotiations are beyond reproach to establish the best short sale transactions you possible can and bring satisfaction to every party in the transaction, including yourself.

If you haven’t signed up for my Free Short Sale Course yet, then you are really missing out, go here: FreeShortSaleCourse.com

categories: real estate, real estate investing, short sale investing, preforeclosure investing

After surviving hundreds of short sale negotiations, my colleagues and I have found that there are several components to getting a short sale approved – and none of them involve immediate acceptance. It’s about knowing what challenges to expect and implementing a few strategies to make it easier to meet them.

The real secret is to get to know your opponent. You have to learn how loss mitigators look at a short sale and what they need to get out of the deal if they approve one. If the property goes into foreclosure, the lender always loses money. Debt collection involves paying attorney fees and losing interest income from the unpaid mortgage. Maintaining REO properties involves appraisal fees, realtor fees, and property maintenance fees. Having another foreclosed property on their hands is not in their best interest.

There’s no baloney about achieving real success in a short sale negotiation. Here are my ten best tips for making the most of your deal.

1) Submit a complete short sale package and make sure it gets assigned to a mitigator quickly. If it doesn’t get assigned, the offer will never be seen. Make sure to follow up and see if the lender has received your offer. Lenders lose short sale packages all the time or claim they never received them. Don’t let this happen to you.

2) Be persistent. Lenders are swamped with foreclosures. They have trouble keeping up with all the short sale cases they are working. The only way to push things forward is to make sure you are pleasantly persistent. Don’t call every day. Call every other day or every third day. When you call, don’t leave a message every single time and make your first impression as a pest. Just hang up and call back.

3) Find out who owns the loan (FNMA, FDMC, FHA, VA, conventional). Make sure to ask the mitigator who owns the loan and record this in your notes. Trust me – it will make negotiating much easier. Each loan investor has their own idea of what they will and won’t accept from a short sale.

4) Summarize your offer for the loss mitigator and ask them to get an interior appraisal or BPO as soon as possible.

5) Conduct an effective BPO.

6) Pull a title report after the BPO is done so you can resolve any outstanding issues before the closing.

7) Ask the loss mitigator what value the BPO appraiser submitted. They may not tell you, but then again they might. Expect to pay around 90 percent of the appraised value.
If the bank will not tell you the BPO, you have to get them to make a counteroffer. (Most of the time, their counteroffer equals the BPO figure anyway.)

9) When you submit your counteroffer, include additional documentation to back up the amount you’re offering. You can use repair estimates, low comps, negative news reports about the neighborhood, and even the MLS listing itself, which shows how many days the house has been on the market.

10) Make sure the lender knows you’re a cash buyer and can close quickly.

We’re not selling any magic potions, and we’re not selling any hyped-up baloney. The truth is much more powerful. Lenders don’t normally view short sales as their best option, but short sales aren’t their worst option either. All you have to do is convince the loss mitigator that your solution makes the best financial sense for them. If you’re ready to educate yourself, develop a good attitude, and be persistent, you can successfully negotiate a short sale.

Need to learn more about negotiating short sales? Check out the Strategic Real Estate Coach website and gain access to everything you need to know about loss mitigation in America!

categories: short sales,negotiating short sales,loss mitigation,avoid foreclosure,short sale investing,real estate investing,flipping houses,make money with real estate,real estate courses,business coaching,real estate,self employment,home business

When you have to sell your home through foreclosure or short sale, is there any way to prevent a deficiency judgment from being awarded? What happens in those situations?

Most of the time, the only way you can avoid a deficiency judgment is by negotiating with the lender during the pre-foreclosure process. They know how expensive it is to maintain their REO properties. The lender may consent to waive their right to collect the rest of the debt if they see that it will cost them less money in the long run to allow a short sale and simply let the debt go.

If negotiations fail with the bank about the status of the unpaid debt, the homeowner will be ordered by the court to pay it back. Only bankruptcy or paying it off will cancel the debt at that point.

What will be the amount of the deficiency judgment? In the case of a foreclosure, the judge will take the balance due on the mortgage and subtract the greater of the high bid at the auction or the appraised value of the home. When the house is sold in a short sale, the amount the bank received from the sale is subtracted from the mortgage balance.

In either case, the homeowner is ordered by the court to pay back the leftover debt. It is entirely possible to have more than one deficiency judgment if there was more than one mortgage on that home.

One of the first things that usually happens after a deficiency judgment is issued is that it begins earning interest. By this time, the dollar amount has already gone up if the bank has any REO expenses, so adding interest only blows up the amount due. In Florida, deficiency judgments rack up 11 percent per year. What’s the interest rate in your state?

Next, the lender usually sells these types of debt to collection companies for 5 to 10 percent of the amount due. Since they know their chances of collecting the debt from a financially drained homeowner are slim to none, lenders would rather get the debt off their books and get what they can out of it.

Payment or no payment, the former homeowner now also has a huge ding on their credit report, as if having a foreclosure on record wasn’t bad enough. That judgment will stay on a credit report for at least seven to ten years, depending on certain circumstances, and it will send a FICO score down. That lower FICO score means that the former homeowner could be turned down for loans, jobs, or even housing because of it.

With the number of foreclosures increasing faster than ever, the number of deficiency judgments are increasing right along with them. As the government re-evaluates how foreclosures are done in various scenarios, they may also reconsider how deficiency judgments are handled as well. On the other hand, they may not.

For now, your best strategy is to try and get the lender to see the wisdom of forgiving the debt and reporting the mortgage as “paid in full as agreed” on your credit report. Negotiating that deficiency judgment away is the key to survival here, because it can hang over your head for a long time.

Need to learn more about how deficiency judgments can affect your life? Visit the Strategic Real Estate Coach website. You’ll gain access to weekly webinars on current events in the mortgage industry and more!

categories: deficiency judgment,foreclosure,short sale,credit report,short sale investing,real estate investing,flipping houses,make money with real estate,real estate courses,business coaching,real estate,self employment,home business,business opportunities

From a real estate investing perspective, we’ve learned that there are huge benefits from thinking like a team leader – even if you’re the only one who works in your office. Partnering in this context doesn’t mean you take on an actual business partner. Rather, you’re working to get to know people that may be able to fill in the blanks for you on certain projects, and you’re trying to build a cooperative mentality between the people you already know.

Think of yourself as a football coach, if you like. Obviously, you have to bring the players together as a team, but you’re also coordinating the efforts of the rest of the coaching staff to bring those plays together. You’re working with your team owner and their staff on the administrative stuff, you’re teaming up with the media to manage the publicity – you’re building a network of relationships with one common goal: encouraging the players to win games.

The same goes for completing a real estate deal. Get to know a good real estate attorney to help with the contracts and legal problems. Choose an accountant with experience in real estate so you can have someone to go to with financial issues. Start networking with lending professionals so you can find seed money more quickly. Now, who else should you have on your team?

Your first step is to find a go-to person who has been around in the real estate game for a while. This is your partner for those trouble spots you’re going to find in almost every deal. Even better, find someone with experience in coaching new real estate investors. Now, that may sound like an opinion rather than fact – especially since I’m a real estate coach – but I promised to tell you what I know about making more money than you ever dreamed, and this is the way to go. Think of it as an extremely cost-effective continuing education program.

Don’t forget to partner with your own employees! You may only have one assistant in your office, but that one assistant can be your greatest ally. Make sure they know everything about how to help you best and how to help the deals flow. You never know when they’ll need to be the one to keep a deal from blowing up.

You’ll also need to build a relationship with someone who knows how to solve title problems. You never know when you’ll run into an issue with one of your properties, and you’ll need to be able to untwist those situations before the deal closes. Get to know an attorney or a title expert who knows the system, and save yourself a lot of grief down the road.

Partner with people who give you referrals and keep in touch with them to make sure your leads keep coming in. Give them incentives in the form of referral fees or commissions, encouraging them to tell you when they find someone who might need your help. If you’re a coach, these are your talent scouts. If you don’t have the big deals, you can’t make the big money.

We’ve learned that the best referral source of them all is the real estate agent. According to the statistics, they’re involved in at least 75 percent of all real estate transactions. They have to complete hours and hours of training before they can obtain and keep a license, so you know they’re committed to the business. And, if you think about it, they know just about everyone in town!

Don’t forget that you can offer your new partnerships opportunities besides referral fees and paychecks. If you’re going to ask for help, you have to be willing to give it. As the local short sale expert, your advice may save a few of their deals, which in turn motivates them to save more of yours, and the mutual appreciation just keeps growing from there!

When you partner with other people in your community, you’re doing more than just furthering your own business interests. You are becoming a part of that community. You become someone that other people want to partner with. You are perpetuating the idea that it really does take a group effort to accomplish something important – in this case, helping homeowners avoid foreclosure.

If you need to learn more about developing real estate partnerships, check our our blog post about building your real estate business on our Strategic Real Estate Coach website!

categories: real estate investor marketing,real estate agents,business development,marketing strategies,short sale investing,real estate investing,flipping houses,make money with real estate,real estate courses,business coaching,real estate,self employment