| Anyone actively investing in foreclosed and distressed | | | | comps in the area; an extensive list of repairs that are |
| properties has no doubt come across one major | | | | needed to bring the property up to marketable |
| problem… Finding deals with equity! Trust us, | | | | condition; a net sheet (a title company will help you with |
| this is a nationwide problem. | | | | this); and some really bad pictures. The bank will then |
| There are so many foreclosures out there; | | | | review the information and make a decision. Let's say |
| unfortunately most of the homeowners owe what | | | | they counter at $230,000; you counter again at |
| their property is worth. We find that most investors | | | | $200,000; they accept! It's that simple! We short sale |
| walk away from deals with no equity. They either don't | | | | many, many mortgages every year. Banks are not in |
| know what to do with a no-equity deal or they are | | | | the business of owning properties. They would rather |
| unwilling to put forth the effort necessary to make the | | | | short sale a mortgage than go to the courthouse |
| deal work. In situations like this, we SHORT SALE the | | | | steps. |
| mortgage. | | | | I like to share an incredible deal which I recently came |
| "What is a short sale?" | | | | across in Arizona, the reason I share this particular deal |
| You ask. To short sale a mortgage means getting the | | | | vs. the dozens of others I do per month, is because |
| bank to accept less than is what is owed as payment | | | | this was the fastest short sale and flip I have ever |
| in full. There are several steps that will ensure your | | | | done. I came across a property valued at $200,000 in |
| success when short selling mortgages. | | | | a distress situation. The property had a mortgage of |
| First of all, you must have the homeowner under | | | | approximately $238,000 and was in need of several |
| control. Many investors are under the misconception | | | | thousand dollars of repairs. Based on the fact that the |
| that they can buy the property directly from the bank | | | | current owner owed more than what the property |
| while it is in the foreclosure process. Not true! The | | | | was worth I did what any prudent investor would do, I |
| bank does not own the property until the moment of | | | | immediately started a short sale proposal. I contacted |
| the courthouse sale. You can buy the mortgage and | | | | the bank and began the process. My first offer was |
| finish the foreclosure process, but you cannot buy the | | | | $120,000. The bank laughed and told me to make a |
| property. You'll have to work hand-in-hand with the | | | | higher offer. After several phone calls, the bank |
| homeowner if you plan to short sale mortgages. | | | | agreed to accept $135,000 as payment in full. That is a |
| Here is how it works: A homeowner calls you and talls | | | | $103,000 short sale! I Agreed and then wholesaled the |
| you he or she is in foreclosure; owes $350,000 on his | | | | property to another investor for $168,000 and made a |
| property; it's worth $290,000 and he is 3 months in | | | | smooth $33,000 in less than 8 weeks!!! |
| arrears. He wants to move on with his life but can't sell | | | | This is a typical case where having a firm grasp on |
| his house because he owes what it is worth. Here is | | | | creative real estate enabled mei to turn a "nothing |
| where you come to the rescue. You meet with the | | | | deal" into a "something deal" just by picking up the |
| homeowner and have him sign an "Authorization to | | | | phone. I made money (and a lot of it) on a deal most |
| Release" form (this gives the bank permission to | | | | investors would have passed by. The bank was |
| speak with you about the account) and a sales | | | | happy with the short sale, |
| contract for the amount you are willing to pay for his | | | | So… the next time you get a call from a |
| property. In this scenario we are going to offer | | | | distressed homeowner with no equity, what will you |
| $190,000. | | | | do? Walk away or make a few simple calls and turn |
| Next, you call the bank and ask for the Loss Mitigation | | | | your time into cash? I certainly hope you will make the |
| Department. This is the department that handles | | | | small effort it takes to short sale the mortgage. It is |
| properties that are in foreclosure. Tell the person | | | | such an easy way to make money in an industry |
| handling the account that you are trying to help Mr. | | | | where great deals are tough to come by. When you |
| Smith with his foreclosure and you are willing to buy | | | | short sale a mortgage, not only are you helping |
| the property from him. However, due to its poor | | | | yourself; you are helping a very distressed |
| condition you are only willing to pay $190,000 as | | | | homeowner and giving them the chance to start over. |
| payment in full. Fax the sales contract for $190,000; | | | | One can never go wrong when win/win is the solution. |