We’re currently working on a short sale for a property on which the owner hasn’t made a payment since February of 2008. (Yes, the banks CAN take that long to foreclose!).
There had been a few offers along the way, but they were either refused by the lender or the Realtor® she was using didn’t know what to do in order to get the deal closed. In addition, the lender is AHMSI, who is difficult to say the least.
Offers came and went because the bank simply didn’t respond. When we finally got involved, we moved right up the chain of command, contacted the Attorney General for the State of Florida and a few other agencies. Amazingly enough, we got a reply within a few days.
However, the offer was $110,000. The bank wanted to NET $140,000. Now, if they’d taken the offer a few months back, or one even a few years ago, they could have probably gotten it. But not now…
The other problem is that the bank’s BPO was about 5 months old. We know of several short sales in the neighborhood in the past 60 days that justified the offer price. Yet, the lender was stuck on their outdated BPO.
We took their recommendation and forwarded an appraisal from the property across the street, which was quite similar. In fact, it was in slightly better condition. Still NOTHING… the lender wouldn’t budge. They set a sale date and the Realtor® that had the listing suggested it was time to give up. The bank was probably not going to work with us. They were probably ticked that we were so aggressive and involved 3rd party agencies. She suggested the seller just let it go to foreclosure and move on.
Well… that’s NOT an acceptable answer. You see, there’s a lot of misinformation about foreclosures and short sales and what really happens financially as a result. Foreclosure can seriously harm a person for many years and there are some serious financial consequences in almost all cases, whether it’s in the form of tax or a judgment.
NOTE: When you get your copy of 3 Simple Steps to Foreclosure Profits today, I’ll give you access to an interview I did with my CPA on the financial ramifications of a short sale, foreclosure, deed in lieu, and bankruptcy. (This may be something – as an investor – you want to listen to anyways because lots of investors are trying to decide what to do with their own business investments).
As an investor, your job is to find solutions to sellers problems that others can’t find. That’s why you get deals done that others can’t and that’s why you make money.
Now back to the case study!
The lender agreed to accept a contract at $130,000. Yet, the property would not appraise. Naturally, the end buyer wasn’t going to pay for an appraisal on a deal that he didn’t even have an approval on. The seller didn’t have the money. So what do you do?
Here’s what we did.
We got the seller to agree to a contract price of $130,000. We put together an addendum that stated that they could walk if it appraised over $110,000. Truth is… they could walk at any point in time, but they felt more secure with it written that way.
Then WE went ahead and paid for the appraisal. It cost $250.00 and it was put in the buyer’s name. We contacted the same appraiser that had done the one directly across the street, which appraised for $110,000 just 30 days prior!
The new appraisal was then submitted to the lender who required a new BPO on their end. (Yes, it IS a lot of back and forth!).
Just this past week, we received a call from the negotiator stating that the two appraisals were in line and that the final investor would be issuing a new approval and the deal should close within the next 30-45 days.
In this scenario, the seller wanted to give up. The agent wanted to give up. The negotiator at the bank probably could care less – and might have preferred we just all go away! But, that’s not where money is made! It’s made by being persistent, consistent and organized.
When it comes to foreclosures, you can make money
Just to get you thinking… here are 7 reasons why you need to – at the very least – understand the mechanics of these kinds of deals in this market:
- Lots of inventory… (And it’s continuing to increase each and every day)
- You’re dealing with extremely motivated sellers…
- You can use professionals and leverage their expertise, connections and relationships… (I can show you how to leverage over 93% of ALL the work – more if you use a VA!) You’ve got to have the right players though or it can be DISASTROUS!!!
- You don’t need credit or a dime of your own money to do these deals…
- You can sell to END buyers which lets you do deals with LESS equity and/or generate higher profits.
- You can generate multiple streams of income from every deal you do (even if you don’t end up finding a buyer)…
- The biggest reason why is that we are going to be in the middle of this for years to come and it’s the single largest pool of opportunity out there right now. AND… there are too many people that DON’T know what they’re doing. So, if you know what you’re doing – and are persistent – then you can get more deals than you can ever handle.
BONUS REASON: It’s a whole lot more streamlined now and armed with a little information, you can do VERY well…
To access our 3 simple steps to foreclosure profits where you’ll learn how to find pre-foreclosure sellers with deals that work for you, how to create additional streams of income with foreclosures and short sales, and how to get deals closed, visit http://www.realestatetrainingacademy.com/foreclosures.
To use this article on your own website, include the following: To access a 3 simple steps to foreclosure profits, where you’ll learn how to find pre-foreclosure sellers with deals that work for you, how to create additional streams of income with foreclosures and short sales, and how to get deals closed, visit Finding Foreclosure Deals at http://www.realestatetrainingacademy.com/foreclosures
