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Brian - L.V.

Short Sale Question/s

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I've been looking at doing some short sales when options won't work, and I couldn't find the answer to my questions as of yet. First of all, the lender told me that they won't consider doing a short sale until the payments are brought current which I don't believe at all. Just in case, has anyone heard of this?

 

Secondly, I'm mainly looking to do a wholesale flip but I'm hearing that many lenders don't allow the contracts to be assigned and require things like pre-approval letters to be submitted in the short sale package. Is this true that many lenders don't allow this? I obviously am not interested in taking title or doing any rehabbing, so I'm looking to flip to someone on my buyers list that specializes in rehabs.

 

Overall how would you rate the process? Even though you typically hear that it's not exactly the easiest process, I've also been hearing just as much that it's not so bad and is definitely worth the paperwork hassle in terms of the payday, especially with all of the pending foreclosures flooding the market.

 

Thanks!

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First of all, the lender told me that they won't consider doing a short sale until the payments are brought current which I don't believe at all. Just in case, has anyone heard of this?

 

Now, if you did do this what kind of leverage would you have....NONE. Talk to the loss mitigation department

 

I'm hearing that many lenders don't allow the contracts to be assigned

I am hearing the same from people I know that do shorts.

 

I've also been hearing just as much that it's not so bad and is definitely worth the paperwork hassle in terms of the payday

I am looking in an area that the bank will give a little discount for a short but you get a better deal when its an REO.

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Here is the thing with short sales. The home must qualify. Just because the seller is behind on payments and the loan is over valued doesn't mean that you will get a large enough discount to do a short sale to do a wholesale deal or even a retail deal. From my numbers I need to be in the 50-60% range. I am not getting those discounts in my market place.

 

Now in regards of closing these transcations. A common way is to do a double close with a land trust. First closing is dry. Meaning no funds. The second closing is with the end buyer with the lender funds or cash. I personally would not do those deals as it is going to end real soon. I have been using options for about 9 months now doing short sales. I wish I came up with the idea using them with Short Sales but I did not. I also am closing with them with MY MONEY and then selling them and the Bank financing is taking them out.

 

Did I mention that I hate short sales. Take 90-120 days to close. Most of my deals are new homes. So now I am starting to get a referral fee from my realtor. (I am a realtor).

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I've been looking at doing some short sales when options won't work, and I couldn't find the answer to my questions as of yet. First of all, the lender told me that they won't consider doing a short sale until the payments are brought current which I don't believe at all. Just in case, has anyone heard of this?
Hehe. . .someone at the bank must have been taking their lead from my kid:

Dad: Jossie, wash my car and I'll pay you $10.

Jossie: Pay me now, Dad, and when I come back from the movies I'll wash the car.

I think you get my point. Like Tony pointed out, if the loan is brought current why would the bank then be willing to negotiate a short sale. The pressure is off at that point.

 

Secondly, I'm mainly looking to do a wholesale flip but I'm hearing that many lenders don't allow the contracts to be assigned. . .
True dat. I've not seen a bank willing to do that.

 

Overall how would you rate the process?
Like Rexford said, I hate short sales. I'd rather hit my thumb with a hammer a few times. Too much time, too much work, too much talking with incompetent pinheads who don't return phone calls and emails, and who are afraid to make a decision. But, that's me. Your mileage may vary.

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Short Sales is a whole different course, hehe.

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Like Tony pointed out, if the loan is brought current why would the bank then be willing to negotiate a short sale. The pressure is off at that point.
That's exactly my point! The guy must have thought that I'm a moron or something. :closedeyes:

 

Here is the thing with short sales. The home must qualify. Just because the seller is behind on payments and the loan is over valued doesn't mean that you will get a large enough discount to do a short sale to do a wholesale deal or even a retail deal. From my numbers I need to be in the 50-60% range. I am not getting those discounts in my market place.

 

Now in regards of closing these transcations. A common way is to do a double close with a land trust. First closing is dry. Meaning no funds. The second closing is with the end buyer with the lender funds or cash. I personally would not do those deals as it is going to end real soon. I have been using options for about 9 months now doing short sales. I wish I came up with the idea using them with Short Sales but I did not. I also am closing with them with MY MONEY and then selling them and the Bank financing is taking them out.

I understand that the homeowner has to be behind on their payments, have no equity, be able to prove financial hardship, have the house preferably need some repairs, etc. Basically, it needs to make more sense for the bank to cut their losses vs. going through the hassle of fixing up and listing the house. Will lenders potentially allow the contract to be assigned? Again, it's my understanding that banks wouldn't really allow this but I've heard of people doing it.

 

Like Rexford said, I hate short sales. I'd rather hit my thumb with a hammer a few times. Too much time, too much work, too much talking with incompetent pinheads who don't return phone calls and emails, and who are afraid to make a decision. But, that's me. Your mileage may vary.
Yeah, I'm not overly excited about it but a foreclosure fell in my lap from my marketing so I'd like to be able to help the guy (and make some $ for my troubles). Is there a better way to approach a deal that doesn't have any equity and has a distressed seller?

 

I have been using options for about 9 months now doing short sales. I wish I came up with the idea using them with Short Sales but I did not.
Sounds interesting. Is it something like getting an option for the price you'd be willing to pay, assigning to a buyer contingent on the bank accepting the offer? :lol:

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Yeah, I'm not overly excited about it but a foreclosure fell in my lap from my marketing so I'd like to be able to help the guy (and make some $ for my troubles). Is there a better way to approach a deal that doesn't have any equity and has a distressed seller?
Well, a short sale is one approach but with all the caveats above. I think the question you need to ask yourself is whether or not the bank will sell for fifty or sixty cents on the dollar. That's what it will take to make it worth your while. And like Rexford said, despite the market here in south FL, that just isn't happening. At least not from what I have seen.

What I am seeing more of recently, are these huge, heavily advertised auctions, where the banks are dumping their properties for sale. Smart. Because buying fever takes over and the prices being paid are well above what the bank would receive otherwise. Frankly, I don't see the bargain prices that are needed, yet the bidders seem damn happy with their purchases.

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buying fever takes over and the prices being paid are well above what the bank would receive otherwise. Frankly, I don't see the bargain prices that are needed, yet the bidders seem damn happy with their purchases.

 

It's the perception of a deal, if Joe Bob average home buyer thinks he saved 10% on a house he is happy. But, when he finds out Joe Blow invester bought the same house but one street over for a 25% discount he is p!55ed, because now he feels violated.....

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You're right, Tony. Perception is reality. And we live in the Ebay era, too. It never ceases to amaze me why a bidding war erupts on, say, a piece of computer hardware. Some "winner", (or loser, depending upon your perspective), saves $5 on a hard drive and they are doing cartwheels. Me? I'd rather buy that same drive from a trusted online retailer and pay a few bucks more, knowing what I'm getting and that it can be readily returned should there be a problem.

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I guess I am old fassion, I get in the pickup and go to the store to get it (and ask for my 10% Military discount to cover the gas) pay the $5 more and have it NOW.

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