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The Ultimate Short Sale Secret

Buying foreclosures can be extremely to qualify for the loan.
profitable for real estate investors. With a short sale, however, the agent is
However, most of these homeowners are simply doing a job, not necessarily
mortgaged to the hilt. They have no assessing the value of a property they
equity, and big loan payments. In fact, are getting a commission from. Sometimes
many actually owe more than the property the first BPO is simply based on a
is worth! "drive-by", which basically means that
Most investors will walk away from these they're looking to see if the property is
deals because they see no obvious profit. still occupied and they want to make sure
However, you can "create" your own that the broker's price opinion is still
equity by negotiating a "Short Sale" with line with what they believe the value of
the bank or lender. the home is.
Why Short Sales Don't Work If possible, do the walk-through with the
However, even experienced investors fail agent and point out flaws and repairs. Be
to create successful short sales, because assertive, but don't annoy them.
they do not know the most important This agent is experienced and does this
secret of all when doing short sales. kind of work for a living. Usually,
Without this secret, an investor with the agents and appraisers are asked to value
greatest negotiating skill will fail. properties at the high end of the scale.
Without this secret an investor armed It is unusual to ask for low numbers, so
will all the right paperwork with fail. it is important that you meet the agent
And without this secret, even an investor at the property. Plead your case and ask
with an air-tight case of low value for the lowest BPO possible.
including repair estimates, etc. will Step 3: What to do if the BPO is too
fail. "high"
It's not that negotiating, paperwork, and If the bank rejects your short sale
a convincing case are not important. because of the BPO, you're going to have
It's just that you've overlooked, the to challenge it. If the BPO agent did a
most important element that lenders use drive by and did not call you, you can
to determine what they will take for a build a case that the lender did not get
property in default. It is therefore a true value because of the serious
The Ultimate Short Sale Secret damage within the house itself. If you
Ok, I won't keep you in suspense. Here's have photos, now is the time to send them
the secret: In order to get big along with your rebuttal.
discounts from a lender on a property If you believe the comps are inaccurate,
facing foreclosure, you must control the make sure you have your own to support
Broker's Price Opinion. (BPO). your case. The info should be pulled
What is a BPO? In short, it is a value from an accepted database.
appraisal. When a short sale package is Request a second opinion. Remember -
submitted to the bank, they send out a don't haggle or ask to speak with a
real estate agent or Broker to the supervisor. You don't want to get your
property to judge its value. file 86'ed by loss mitigation because you
The broker or agent handling the BPO is are overly aggressive. They're in control
working with the bank. Their job is to during this part of the game. All of your
simply visit the property and give their negotiations should be in writing and
opinion on its value "as is". done by fax, unless they tell you
And here's the key: it's a broker's price otherwise.
OPINION! And since opinions are subject, The purpose of your next conversation is
you have the ability to Influence that to make the bank question the first BPO.
opinion. Learn how to do that and you Banksare not in the business of losing
can create $10,000's in your bank account money, and an incorrect BPO can come back
with little effort. to hauntthem. It's your job to convince
Step 1: Do Your Own Research them to sell lower without sounding like
Before you're ready to influence the BPO, you're trying to
you'll have to start out with doing your "steal" the property from them.
own research and preparing your short Many banks will tell you that a second
sale package effectively. What should you BPO is too expensive. Most BPO's only
include? costaround $75.00, but the cost can be as
By this time, you should have already high as 700.00 for an FHA or VA loan.
done a walk-through of the property. If Tell themthat you'll pay the expenses and
you have not done so already, inspect the meet the agent at the property. You want
property (preferably with a home to be listed asthe contact person.
inspector or real estate broker of your 路 Get a second opinion. Meet the new
own) and gather the following: agent at the property and plead your
路 Photographs of the inside and outside case, using any additional research
of the property. This should include you've pulled up as well as the other
room-by-room pictures, cracks in the materials your previously presented. It
ceiling, other states of disrepair, you helps is this agent is local and familiar
get the picture. with the property values in the area.
路 A list of repairs that are needed, 路 Take all of your paperwork and give it
from normal wear-and-tear to major to the loss mitigators and agent.
improvements. Get an estimate for these 路 Sell your case. There should be a
repairs - try for the highest bid you can difference in the BPO's and you can now
obtain! tell them that the price is simply too
路 Information on the neighborhood, local high.
economy, and other local factors that can 路 Use the sympathy factor - Everyone in
lower the value of the home. Offer foreclosure has a sad story to tell.
specific negative information about the Make sure the BPO agent knows their
property. This can include local story. And tell them, that you're trying
newspaper articles or information from to buy the property as an investor to
the Vital Statistics office in your help out the homeowner and save them from
state. (You should be able to access foreclosure, but you need the value to
these from a local library.) come in at or near (the price you need).
路 Information about the family. Remember to emphasize anything
Remember, the Brokers and Loss Mitigators detrimental to the home value. If the
are people, too. Photographs of the house is ugly, you can tell them that the
family, information about their hopes, inside of the house looks just as bad as
and concrete evidence of how this short the outside. An interior BPO is the only
sale will help them move on with their way to reflect the true value of the
lives... property. It's important that you stress
Now you're ready to make an offer. Submit the value of the interior inspection and
the paperwork with your offer in writing do what it takes to make sure the bank
by fax to the loss mitigator with whom agrees to it.
you are working. Step 4: Close the Deal
Now, follow up with the loss mitigator. Sometimes the second BPO will be
Make sure that they have received all drastically different and the bank will
your paperwork and offer. This is agree to negotiate down. You will still
extremely important. It sometimes seems have to go back and forth, until you
that lenders have a special fax machine guess the lowest amount the bank will
design to eat your paperwork. If they actually accept. If that meets your
haven't received it, fax them again, requirements - Congratulations.
immediately. However, if after a second BPO, the bank
Step 2: Influence the Broker's Price won't budge, it may be time pass and move
Opinion on to the next deal. 30% of BPO's simply
When you are on the phone with the loss don't go through because of refusals to
mitigator, mention that the BPO agent is negotiate on the lender's end. That
to contact you, before going to the leaves you with 70% success with your
property, because you are the only one other short sale properties. If you have
who has the key and can let them in. presented all of your price factors and
Follow this up with a fax, so they have they still disagree with your offer, then
your contact info in their file. If the it may be time to move on.
BPO agent goes out there without you - In fact, it may be for the best.
you're sunk. With mortgage fraud and refinancing, many
If possible, take the package you have foreclosed properties are leveraged at
prepared for the short sale and bring it 125%. It's best to make sure that the
with you to the property to meet the property has at least $20,000 in standing
first agent performing the BPO. The goal equity. If you need help in deciding
here is to make sure that the agent sees what price to accept, check out our Deal
it through your perspective. Remember - Evaluation Tool at
in the real estate world, agents The next article will help you make the
typically try to get the best appraisal most out of your profit, by teaching you
values possible, because they have a cut the best exit strategies when it comes to
of the action. Most homeowners trying to cashing out of preforeclosures.
purchase a home need top value in order




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