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Ten Keys To Getting A Short Sale Approved
Posted by: | CommentsShort sale gurus say a lot of wild things sometimes, but some of their methods they use to get their short sales approved are really nuts. I hear about secret spreadsheets, magic phrases to speed up the approvals, and inside contacts who guarantee to put your files on the fast track. Most of it is just ridiculous.
We have been through hundreds of negotiations like this, and we have learned that there are more than a few steps to take before we can finally receive that approval letter. None of those steps suddenly enable you to jump from A to Z right away. You simply have to learn what you’re dealing with so you can know how to manage the process more effectively.
If you want to be successful at negotiating short sales, it’s really all about understanding what lenders are thinking during those negotiations. They’re thinking about which course of action will cost them the least amount of money. If they see any way to collect that debt, they will do it. If they see any need to avoid a long-term bad debt, they will generally move in that direction. Lenders know how much it costs to continue to collect debts and maintain REOs. They know exactly how much money they lose when they have to take possession of a foreclosed property.
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) Don’t give up. With all the foreclosures being processed lately, the loss mitigation departments are swamped. Pleasant persistence is the only way to get past this roadblock. If you don’t find the information you need, call them back once every two or three days until you do. You don’t have to be a pest and leave a message every time you call. Just say “thank you” and call them again another day.
3) When you find out who is handling your short sale package, ask them who owns the loan. I guarantee this will make your negotiations go more smoothly. Once you know whether the loan is a VA, FHA, Fannie, or Freddie loan, you can know exactly what their negotiation limits are.
4) Pleasantly explain your offer to the loss mitigator and push to have the lender order a new interior appraisal or BPO immediately.
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) Don’t be shy about asking the loss mitigator about the BPO number. You might get an answer, and you might not. If you do find out, count on paying 90 percent of that number.
If the lender refuses to disclose the BPO, you need to ask for a counteroffer. (When they make their counteroffer, this is usually equal to the amount of the BPO 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) Remind the loss mitigator that you can close quickly with cash.
You don’t need special tricks, and you don’t need a buddy in every loss mitigation department. You just need to realize that you can use the leverage from the fact that a short sale is generally better than a foreclosure in the eyes of a mortgage lender. Your job is to make them a sensible offer that will help them unload a problem property with the least amount of expense. Focus on what they need, and you’re on your way to getting what you need.
Want to learn more about conducting a short sale negotiation? Check out the Strategic Real Estate Coach website and treat yourself to the most current information on loss mitigation in America!
Foreclosure: Know Your Options
Posted by: | CommentsThere are few things more stressful than finding out that you’re about to lose your house. Cash flow is tight, bill collectors are blowing up your phone, unhappy family members might be pointing fingers, and you’re in enough hot water without having to find a new place to live, too. All you can think about is making the problem go away.
Maybe you already have an idea of what might happen in foreclosure, especially if you know someone who has already been there. Most people don’t realize they have more options than to stay or leave. Moving away might be a temporary solution, but there’s more to it than just giving the house back to the bank. How will the foreclosure affect your credit? Will you even be able to buy a car after this is over?
No matter whether you’re the homeowner or someone who works with homeowners in foreclosure, you should be aware of all the options in this situation. If you’re the homeowner, it is best to understand everything you can about the foreclosure process. If you’re someone who works with homeowners, it’s your job to help that homeowner understand their options during this difficult time. It helps if everyone has a realistic view of what could happen and why.
Two of the options have been covered frequently in the media lately: deed-in-lieu and loan modifications.
When homeowners agree to a deed-in-lieu, they voluntarily give up their home. The bank is spared the time and cost of going through with the foreclosure, but the homeowner’s credit is damaged just the same.
What about loan modifications? The government’s Home Affordable Modification Program (HAMP) promotes mortgage loan modifications as being a viable way to deal with the foreclosure crisis. Yet the current rate of success for those loans to go from trial to permanent modification is 4 percent. Using California as an example, roughly 140,000 trial loans have entered into the modification process; however, only 5,600 loans will be modified based on their current success rate (4 percent). California filed over 450,000 notices of default for 2009. Those being helped are few and far between given the current numbers.
There are four more successful options.
1) Live in the house until eviction, and let the bankruptcy system hold off the foreclosure until the auction date. It won’t make the foreclosure go away, but it will help the homeowner save money temporarily.
2) List the house for the amount of the debt and hope someone comes along who loves the house so much that they will pay your asking price before the auction date. You can dream all you want, but the odds are that nobody will pay more than the house is worth, and you’ll end up going back to option one.
3) The homeowner can list the property with a real estate agent who is willing to wait out the short sale process and encourage buyers to do the same in order to get a discount on the property. The buyer may get a great deal on the house, and the real estate agent may still get credit for the sale, but it doesn’t always work that way.
The agent can run into a roadblock when the buyer says they need a home right away. Most short sales can’t be completed in less than 60 days.
If the real estate agent or the seller isn’t familiar with negotiating a short sale, other problems can arise during the negotiation process. Banks have entire loss mitigation departments staffed with people who are trained in collecting mortgage debt, and they have no problem taking advantage of homeowners who don’t understand the system.
I’ll give you an example. Did you know that deficiency judgments and post-sale promissory notes can be avoided in some cases? You can know the basics of how the process is supposed to work, but shouldn’t you learn how to work the process? Wouldn’t that alone be worth it?
4) The fourth option is to put the home up for sale with a real estate agent who is willing to work with an investor as the buyer. A well-educated investor would use the right contracts and the lender’s forms to obtain approval for a short sale while still guaranteeing the real estate agent’s commission. The investor would then own the house to keep, rent, or sell, and the homeowners could move on with their lives.
Why should the homeowner work with an independent short sale investor? People who negotiate short sales every day know the best ways to get the best deal for the homeowner. For instance, the BPO process is more than just having an appraiser stop by. An experienced investor will know how to handle the situation to the homeowner’s benefit.
Every real estate agent who works with homeowners who are threatened with foreclosure should know these four options. Homeowners can file bankruptcy and stay until the auction, sell the property for the amount due on the mortgage, ask the lender to approve a short sale and hope a buyer will wait for that to happen with them, or apply for a short sale with an investor waiting to become the buyer.
My partners at Strategic Real Estate Coach specialize in educating people about short sale solutions for homeowners in trouble. We offer a free Silver Membership in the coaching program, and the benefits include several reports to help you learn everything you need to succeed!
To get more in-depth coverage of the legal issues you might face, take a look at the blog on topshortsalelawyer.com. Attorney Jeff Watson is great at explaining the issues for short sale investors.
When you help people learn the truth about foreclosure and how to avoid it, you give them a chance to overcome one of the most difficult times in their lives. Educate each homeowner about their options, and watch them turn a bad situation into a fresh start.
Need to know more about foreclosure options? Get free information from our real estate coaching website! You can get a unique content version of this article from the Uber Article Directory.