Miracle of Miracles…The Short Sale Lender Called ME!

I got a call from a loss mitigator yesterday. Did I just get punk’d by Ashton Kutcher?

When I saw the red hold button blinking on my phone, and my office manager IM’d me that this particular mitigator was on hold, my body reacted as if someone needed immediate medical attention. “Drop everything!! Get a doctor!! Code Blue!!”

You always HOPE that the bank will call you back. They rarely do, but despite the fact you still hold on to that tiny shred of hope, that morsel of divine intervention.

This was a 2nd lienholder. We were waiting on approval from them, to take $1500 on a $20k payoff. We already had approval from the 1st, and the funding close date is 10days away.

So as I stared at the hold button, I hesitated to release it. As I have a tendency to do sometimes, my mind raced to the worst case scenarios…

The mitigator was calling to say they wanted full payoff and wouldn’t settle for less.

They were calling to say they knew about the simultaneous closing and no dice, they’ll take the house to auction.

They needed 600 more days to review the file.

They had to do another BPO.

He was leaving the company and another mitigator was taking over the file.

The FDIC just raided them and were being absorbed by Bank of America.

The loan was bundled in a CDO and they couldn’t find the note.

I picked up the phone. His name was Mark. He said he was calling to say he was writing up his review for submission, and his opinion to the investor was to approve the deal. He’d have an answer for my by Monday or Tuesday. I thanked him and hung up the phone.

I took myself off the oxygen tanks and breathed a sigh of relief. And then something happened. I felt really special. Heck, I should feel special. Nobody else gets a return phone call from loss mitigation.

Is it okay to feel cocky sometimes?

End Buyer Funding on a Short Sale

If you’re having issues and snafus closing your short sale deals because of your end buyer’s lender, you may want to look at controlling that aspect of the deal. It’s becoming more and more prevalent these days that snags arise as conventional lending guidelines and seasoning issues get goofier and goofier.

I found that when I have an end buyer use my lender, there aren’t any problems in closing deals. But when the end buyer uses their lender, the chance for something going haywire is so much greater.

This happened to me last week. As soon as I got short sale approval, I told my listing agent that I wanted to shuffle the buyer to my lender. She said the buyer is pretty insistent on using their mortgage broker. I called the broker and introduced myself. I explained that since short sales are so time sensitive, and had to close by a certain date, that I preferred to have the buyer use our lender, who can close very quickly.

The broker said she had 21 years experience with fast closings and VA loans. She never had a problem. The buyer was a vet. Against my better judgment, I didn’t press the issue to use my lender. BIG MISTAKE. 7 days before the close date, and 8 days before the foreclosure auction, the buyer didn’t qualify for his VA entitlement. I was ticked at myself for not following through. This could have been avoided entirely if I used my guy.

We immediately put another offer in to the short sale lender. The investor was Freddie Mac. They declined the offer, saying it was too close to the auction to review and they wouldn’t postpone. So they took it to sale.

All I can say is: control as many aspects of the short sale as possible.

Another Successful Short Sale

We just got approval on another short sale. No matter how many times you do this, it’s always exciting getting that approval letter spitting out of your fax.

We had a cash buyer lined up for a while, and because the price of the house was so attractive, the buyer stuck with us. We created a sweet spread for a profit of $31k.

The cool thing about this deal was that because it took awhile to get approved, we submitted a lower offer than the original one they were reviewing. We forced another BPO because the investor’s guidelines required a new valuation of the house after 60 days of non-decision and no movement on our offer.

So the delay in getting us an answer actually helped us create a greater spread.

It’s very frustrating when your short sale offer takes forever to get approved. Buyers get fed up and rescind their offer. But the upside is…after so many days you can request another BPO to be done.

If you’re in a declining market, you WANT to make sure the bank does another valuation. And when this happens, make sure you submit a new offer…much lower than your previous one.

We’ve done this on a good percentage of our short sales with great success. Try it…you’ve got nothing to lose.

More Bank Failures

A report was released today stating that bank failures are up to 84 this year. This signifies a growing opportunity to buy defaulted paper, short sales, and REOs. As an avid real estate and short sale investor, we’ve never seen opportunity like this.

Please understand this observation is not meant to diminish the severity of the economic crisis our country is faced with right now. The way I see it, investors are the ones infusing the economy with much needed cash. We’re the ones buying short sales and REOs, keeping houses occupied with families and preventing neighborhoods from deteriorating.

Yet banks don’t want to recognize this. Many of them feel investors are responsible for the mess we’re in. Ahh, but banks and institutional lenders should not point the finger. It started with the banks. If the banks didn’t loosen their lending guidelines in the first place, and permit less than credit worthy buyers from obtaining a loan, we wouldn’t be in this mess.

And yet the banks are setting up all kinds of roadblocks and guidelines to prevent the real estate investor from making a profit, as if making a profit were evil and a scourge that should be eliminated altogether. Just look at the seasoning requirements banks are instituting. More and more lenders are requiring 90-180 days seasoning on title before a house can sold to an end buyer. Pure goofiness. It should be going in the other direction. No seasoning requirements. Try this for a month and see how quickly money finds its way into the market. Credit will relax, and the economy starts flowing again.

Make it easier to do short sales, not tougher. Get inventory moving faster, get defaults off the bank books, take the money and move it forward.

Short sale negotiations is my thang

Been negotiating short sales now for over 6 years. Started before all the hullabaloo of the foreclosure tsunami and the subprime meltdown. I remember it being so much easier to negotiate with loss mitigation because they weren’t so swamped with files. A few weeks was average for a response and approval.

Over the years, I’ve personally negotiated tons of successful short sales in many states around the country. The experience of being on the phone on a daily basis talking to banks, lenders, lienholders, the IRS, creditors, and vendors has really given me an education in how to negotiate effectively.

I LOVE to negotiate.

You get to really know the psychology of negotiating by doing it every day. How loss mitigators think, why they say the things they do, the tricks they’ll use to get the most money for the banks, who makes decisions and who doesn’t. It’s helped me to handle every objection and tactic in the book.

Also, being a part of several Short Sale mastermind groups over the years with some of the top short sale investors and realtors in the country has really skyrocketed the learning curve. As you know, there’s no substitute for experience and just diving into the fire. We share information, push each other to fine tune our businesses, and give one another total support. The great thing about being in a short sale mastermind is that we keep each other accountable. Everyone is the group is a performer. If we don’t do what we say we’re gonna do, it’s adios. I feel very fortunate to be a part of the masterminds.

Can’t wait to share what I’ve learned with you, so you can make your life and business easier and much more profitable. Stick around for negotiating strategies, tips, and real life loss mitigation stories on how to plow through the muck and roadblocks to get your deal done.