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